Autumn 2021: Changes in Banking and Finance Law



The banking sector has proven to be stable and ready for the planned increase in capital requirements despite the crisis last year, according to the results of the stability assessment conducted by the National Bank. 30 largest banks successfully underwent stress testing. For the first time in stress testing, the NBU included an assessment of the risk of loss in value of government securities (which constitute a large share of the bank capital) measured at fair value.

The NBU has raised the discount rate to 8.5% with effect from September 10, 2021. Strengthening monetary policy will help keep inflation expectations under control and return inflation to a sustained slow down to 5%, which is projected to be achieved in 2022.

The NBU is curtailing anti-crisis monetary measures to strengthen the effect of raising the discount rate and curbing inflation. As of the 4th quarter of 2021, it stopped conducting long-term refinancing operations and interest rate swaps. The last interest rate swap auction took place on September 29.

A new generation of the electronic payment system of the National Bank of Ukraine operates based on the international standard ISO 20022 and 24/7 starting August 20, 2022. The project is being implemented jointly with SWIFT supported by the USAID Financial Sector Transformation Project and the European Bank for Reconstruction and Development (EBRD).


The National Securities and Stock Market Commission has prepared an explanation #888 on derivative contracts; the clarification is based on provisions of parts one and two of Article 7 of the Law of Ukraine On Capital Markets and Organized Commodity Markets.

In the explanation, instruments are listed subject to whether they fall under the category of financial instruments - securities, money market instruments, and derivatives, such as options, futures, swaps, contracts for differences with different types of underlying assets: commodities, indexes, equity and credit derivatives, etc. The Commission sets examples of contracts that are expressly exempt from the financial instruments, they are, commodity spot forward, wholesale energy products deliverable forwards, and other.


The parliament voted for the amendments to certain issues related to the activities of the National Bank of Ukraine. The main goal of this law is to improve the internal governance and functioning of the central bank, in particular the procedure for cooperation between the NBU Council and the NBU Board. Furthermore, the law aims at improving the efficiency of managing foreign exchange reserves. It also regulates and updates NBU functions in the nonbank financial services sector, which has been in effect since mid-2020, currency regulation and supervision, and control and regulation of cash circulation.


On October 5, President has signed the Law On Industrial Parks, which is providing for incentives to attract investment. This law creates financial, infrastructural, and institutional incentives for the creation and development of industrial parks, including:

  • full or partial compensation of the interest rate on credits (loans) for the development of parks and/or economic activities within industrial parks
  • an opportunity to carry out activities in the industrial park in industrial and/or household waste management (except for waste dumping)
  • reducing the minimum area of ​​the industrial park from 15 to 10 hectares and increasing the upper limit from 700 to 1000 hectares
  • construction, reconstruction, and repair of engineering and transport infrastructure (highways, communication lines, utilities supply means, etc.)
  • construction (improvement) of industrial parks

In addition, the Verkhovna Rada is currently expected to adopt two draft laws, providing for appropriate fiscal incentives, in particular:

  • exemption from income tax for residents of industrial parks for 10 years, provided it is reinvested in the development of the investment project
  • exemption from VAT of new equipment for own use import
  • establishment of real estate tax benefits on the territory of the industrial park (by decision of the local self-government authority)


The NSSMC approved the draft Licensing Conditions for trading in financial instruments. The document, aside from corporate requirements, and the application package list, reiterates a possible combination of activities on trade in financial instruments among themselves and with other types of professional activity in the capital markets and the organized commodity markets. The draft will soon be posted on the NSSMC’s official website for suggestions and comments from the professional community and all stakeholders.


The National Bank has expanded the ability of banks to reduce credit risk when calculating economic standards. The list of acceptable credit risk mitigation instruments includes agreements that provide for the bank to reimburse the amount of the debt in the event of default by the bank. Eligible providers of such collateral are international development banks and banks with an international credit rating not lower than AA- by Standard & Poor’s or Fitch Ratings, or AA3 by Moody’s Investors Service.


The NBU approved the Regulations on Additional Requirements for Non-Banking Financial Institutions' Lending Agreements (Consumer, Financial Credit). The goal is to make agreements more informative and understandable for consumers of financial services. The requirements came into force on November 5, 2021, with a transition period of 3 months.


The NBU requires non-bank financial institutions to disclose more information to its customers. From November 10, 2021, the requirements apply to non-banking financial services market participants throughout their term of registration in the State Register of Financial Institutions. Providers of non-banking financial services disclose their own registration data, terms, and conditions of operation, a list of their websites. In addition, information on branches and the list of persons providing intermediary services are publicly available. Annual financial statements certified by an independent auditor remain mandatory for disclosure.