The National Bank of Ukraine released results of stress testing and sustainability evaluation of Ukrainian banks
At the end of 2019, the National Bank of Ukraine (NBU) conducted stress testing and sustainability evaluation (asset quality review) of banking institutions. The inspection covered 29 financial institutions, which together account for over 90% of the assets of the banking system. You can find its results on the NBU website.
The required (target) level of capital adequacy was determined considering the balance sheet as of the beginning of 2019, but for many banks, it was reduced given the measures actually taken. Reportedly, the NBU will reconsider the target levels for the banks based on the results of the 1H 2020, provided that the measures taken lead to a reduction of risks in their activities.
Nine banks, most of which have foreign capital, were successfully stress-tested. State-owned PrivatBank and Ukrgasbank also showed positive results. Neither FUIB nor Alfa-Bank require capital, but the capital requirement for Alfa-Bank was determined considering the effects of the merger of Ukrsotsbank.
According to the results of asset quality review, only one bank had capital requirement, but it offset this requirement in autumn. The required capital adequacy ratio was set above the minimum requirements for 18 banks. The capital requirements only under the adverse scenario were set for seven banks out of this number.
All banks with established capital requirements have already developed and agreed with the NBU on capitalization or restructuring programs. Financial institutions are obliged to implement them by the end of September 2020.
The article was prepared on the basis of the following materials: https://bit.ly/306cXwZ