Following the adoption by the Parliament in March 2015 of the Law, which increased responsibility of persons related to a bank (the Law), the National Bank of Ukraine (the NBU) developed several regulations (Regulation No. 328 and Regulation No. 332 of 21 May 2015 and Regulation No. 357 of 4 June 2015 – collectively referred to as the Regulations) aiming at practical implementation of new requirements established by the Law.
To remind, the Law expanded the list of persons related to a bank as well as liability of such persons, set out new restrictions on transactions with related persons, introduced new requirements regarding disclosure of the banks' ownership structure and reconsidered the approach to obtaining approval for acquisition of a significant interest in a bank.
Being inspired by the IMF support of the targeted transparency of the Ukrainian banking system, the NBU has further developed most of the novelties established by the Law. In particular, the NBU changed the requirements to solvency of the ultimate beneficial owners of Ukrainian banks (the UBOs) and established new approaches to disclosure of bank shareholding structure.
New regulations – important takeaways:
The NBU enhanced requirements to financial standing of the UBOs. Under the new rules, the UBO's income should be sufficient to ensure further capitalisation of the bank. In setting out the UBO income sufficiency test, the NBU linked the UBO's income to the bank's regulatory capital or its charter capital, in case it exceeds the regulatory capital.
Example: a person acquiring 50% shareholding in a bank with regulatory capital of UAH 500m should prove legitimate income in amount exceeding UAH 250m. Otherwise, such person will not obtain the NBU approval for the acquisition of a significant interest in such bank.
In case a bank’s shareholding structure does not reveal a clear link with a particular UBO, the NBU will most likely suspect such bank in having nominee shareholders acting in the interests of a real UBO. In such case, the NBU will be able:
Banks designated by the NBU as having non-transparent ownership structure may face serious adverse consequences. In particular, the NBU may refuse to grant a refinancing loan to such bank, prevent it from purchasing foreign currency or otherwise restrict banking operations. Business reputation of the managers of such bank may be seriously affected. In the worst-case scenario, the NBU may designate such bank as a "problematic" one.
The Regulations established new rules directly affecting the structures commonly used by lawyers when documenting an acquisition of a Ukrainian bank:
As a result of application of the new rules set out by the Law, certain persons found themselves in a position where they de-facto became indirect owners of a significant interest in a bank irrespective of control over the direct owner of the bank. The Regulations addressed this situation and established a procedure for obtaining an approval by such persons. The NBU extended the final term for submission of required documents to the NBU until 8 July 2015.