In Ukraine, may 23, entered into force the Law “On amendments to some legislative acts of Ukraine concerning improvement of mechanisms of regulation of banking activity”, which will make it impossible to cancel the decision of the national Bank to nationalize the banks.
The day before, 22 may, the document being one of the conditions for the new program of cooperation of Ukraine with the International monetary Fund, was published in the parliamentary newspaper “Voice of Ukraine”. According to the final provisions came into force on the day following the day?? publication.
The law envisages a range of changes aimed at improving the activities of banks, in particular, by strengthening corporate governance, and the settlement features of court proceedings in cases concerning the withdrawal of banks from the market.
In addition, the law introduces updated arrangements of the withdrawal of banks from market, aimed at improving liquidation procedures and meeting the requirements of a large number of creditors of the liquidated Bank, as well as the improvement of mechanisms of possible participation of the state in the conclusion of the Bank from the market.
It is expected that the implementation of the provisions of the law will help to improve the quality and efficiency of implementation of the National Bank of its functions in the sphere of banking regulation and supervision, to complete the procedure of the withdrawal of banks from market/liquidation of banks, the decisions of the abolished courts.
In particular, this law guarantees the inevitability of the withdrawal of banks from the market. If the court recognizes illegal the decision of the NBU on the withdrawal of the Bank from the market, the procedure of insolvency or liquidation of the Bank are not terminated. So, sales of assets and payments to depositors and creditors of the Bank will continue. In fact, the law allows to remove the “white spots” in the legislation that had previously allowed courts to revive the banks, withdrawn from the market due to insolvency. The ability of the courts to return the banks “to life” is limited in many countries, including the European Union.
Secondly, the law changes the procedure for appealing decisions of the National Bank and other state bodies in the process of the withdrawal of banks from the market. Courts should not replace the national Bank. They should be able to consider a decision on the legality, but should not question the calculations, evaluations and conclusions made under the authority of regulators, and their technical judgment.
Third, the law clearly defined the prerequisites and the procedure for the former owners to compensation, if the court finds the decision of the NBU is illegal. To the calculation procedure of compensation was clear and impartial, the main role will play an internationally recognized auditing firm.
Fourth, the law improves the procedure of the decision of the National Bank. Specifies the number of rules for “professional judgment” and procedural rights. In particular, the law will allow to detect problematic banks on earlier stages, and, therefore, maintain their assets and withdraw banks from the market with minimal losses.
Fifth, States are now more options how to implement the nationalization of the banks if needed, including tools for creating the transition of the Bank or the transfer of the portfolio of liabilities and assets of the receiving Bank. Due to this, the process will become much more efficient, in order that the Bank could begin its work almost immediately.
As reported by UKRINFORM, the Verkhovna Rada during an extraordinary meeting on may 13 adopted the law “On amendments to some legislative acts of Ukraine concerning improvement of some mechanisms of regulation of banking activities”.
He, in particular, will prevent the reversal of the decision of the NBU on the nationalization/liquidation of banks and the return of unjust compensation from the state budget to its previous owners.
The adoption of the “banking” of the law is one of the two main conditions for the IMF to provide financial assistance to Ukraine (the second condition – the adoption of the law on the land market, it was adopted March 31).
Immediately after the adoption of the law on banks MPs Anton Polyakov (independent) and Alexander Dubinsky (“servant of the people”) registered in Parliament a draft resolution concerning its repeal.
At the meeting of may 19, the Verkhovna Rada rejected the draft resolutions, which proposed to cancel the decision on the adoption of the law on failure to return insolvent banks to the former owners.
On 21 may President Vladimir Zelensky signed the law.