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Parliament passes law on accelerated banks' capitalization procedure
29.12.2014 | 11:07
Information and Communication Department of the Secretariat of the CMU

The Verkhovna Rada of Ukraine adopted the bill on measures to facilitate banks’ capitalization and restructuring (№1564), which is part of the government-introduced reform package and edited with the parliamentary coalition.

Presenting the bill in the Parliament, Prime Minister of Ukraine Arseniy Yatsenyuk stressed that one of the key problems of today's Ukrainian financial and economic system is the banking sector, "Due to the devaluation of the national currency, confidence in the national banking system has been undermined. It is objectively related to military actions and Russian military aggression. Millions of Ukrainian citizens who have their deposits in the banking system, went to take them off, as they are not sure that tomorrow they will be able to get these funds from the bank."

The current legislation, according to him, involves "procedures of banks’ capitalization, which will last for months." Instead, the Government proposed the bill №1564 which provides "prompt and quick decision making regarding capital inflow into banks and the Deposit Guarantee Fund and guarantees to the citizens of Ukraine to obtain the funds they have on their deposits within the limits prescribed by law."

He said that this year the Government has already capitalized Oschadbank at the amount of UAH11 billion. It is also expected that the Cabinet will decide on the capitalization of Eximbank at additional UAH5 billion, "The State Budget envisages UAH36 billion for capitalization of banks that will meet the criteria defined by this law, and these criteria will be agreed with our international partners."

The law provides to allocate additional UAH20 billion to the Deposit Guarantee Fund, "Those people who fall under the guaranteed deposits - which 200 thousand - will be able to get their money if the corresponding bank gets into financial distress".

"We recognize that this is not a final decision. And, of course, UAH56 billion will be hardly enough to support everyone. But this is a very important step that will restore confidence in the banking system and will provide an opportunity for the state to capitalize the banks that meet the criteria of consistency and become banks that will be able to meet their obligations," the Prime Minister said.

Arseniy Yatsenyuk underlined that banks capitalization would be carried out publicly, "this will send a clear message to all shareholders and especially depositors in banks that the banking system is able to get through this difficult period of the year 2015".

 

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