AUB Requests NBU initiate settlement ratio of regulatory and statutory capital of banks

According to the newspaper Economic News ", AUB has sent the head of the National Bank Sergei Arbuzov letter requested the regulator to initiate the amendment of article 32 of the Law of Ukraine" On Banks and Banking, relating to the size of regulatory capital. The second sentence of section 5 of AUB offers set out in this edition: "the bank's regulatory capital may not be less than the established minimum requirements of this Act to the authorized capital needed for establishing the bank." Its proposal to the AUB argue the need to bring the law into conformity with the beginning of March, which came into effect the Law № 2994-VI «On Amendments to the Law of Ukraine" On Joint Stock Companies with respect to improvement of the mechanism of societies. " This law, in particular, Art. 14 of the Law "On Joint Stock Companies" The requirement to declare the obligation of society to reduce its share capital if the net asset value (equity) is smaller than the size of the share capital. The Association are reminded that in the current edition of "capital of the bank can not be less than the capital." However, a significant deterioration in the quality of credit portfolio, which took place under the influence of the economic crisis has required banks to the formation of significant amounts of reserves, giving rise to losses at many banks. Consequently, as of January 1, 2011, 43 banks regulatory capital decreased less than authorized. Correct this imbalance through a new cap in a crisis is impossible, since the capital increase the absolute amount of regulatory capital increases, but it remains below the share. In addition, they say in AUB, as recommended by the Basle Committee, indicators of capital adequacy is a relative measure of the adequacy of regulatory capital of the bank. With an argument AUB respondents agree "i" experts and market participants. According to the head of the supervisory board of Platinum Bank Yuri Blaschuk if the regulatory capital adequacy of financial institution conforms to the norm, while bank assets are substantial and quality, then nothing and nobody should interfere with his work. The proposed changes will allow the Association to most small banks whose charter capital is less than 120 mln., Conform to the standards of adequacy, without the need to increase the authorized capital, the head of the supervisory board of bank "Center" Alexander Okhrimenko. Thus, the AUB is lobbying for smaller financial institutions an easier way of forming the minimum required regulatory capital. According to the financier, the initiative is unlikely to affect the global market. At best, its benefits will take a number of smaller banks. However, if the financial institution can not form the required regulator of the charter capital of 120 mln., Its shareholders should seriously think about whether further action. Recall, Art. 32 of the Law "On Banks and Banking Activities" as amended in 2001 contained a rule similar to that now proposed AUB. However, in 2006, with increasing requirements for the authorized capital to create a bank with EUR3 million-EUR5 million to EUR10 million wording was changed to non-proliferation of new requirements for the authorized capital by the amount of capital of existing banks. Ruslan KISLYAK