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Ukraine's national bank puts off implementation of obligatory insurance of all collaterals by banks to 2019

Ukraine's national bank puts off implementation of obligatory insurance of all collaterals by banks to 2019The National Bank of Ukraine has postponed the introduction of the rule to obligatorily insure all assets used as collateral and some signs of large credit risks until 2019.

According to a posting on the central bank's website, the amendments were made to the rules determining the size of credit risks.

"Since early July 2016 banks applied the rules in the test mode. The discussion between banks and the NBU about some provisions of the legal act continued. After analyzing the results of the test mode and proposals of the bank society the NBU amended the rules," the regulator said.

The NBU cut the loss given default (LGD) for calculating credit risks of state-run enterprises from 45% to 30%; specified some requirements to monitoring assets used as collateral; and settled the issue of assessing credit risks for swap transactions.

The central bank also expanded the list of tools to provide for the implementation of liabilities of debtors by other participants of the group. The NBU envisaged the possibility of using avals and irrevocable standby letters of credit.

Banks can use financial reports of borrowers received from open sources (websites of companies and National Commission for Securities and the Stock Market).

The procedure for assessing credit risks for homeowner associations was introduced. The document was expanded with the new section regulating the assessment of credits provided to implement investment projects.

The NBU anticipates that the amendments would help to take into account more specifics of post-crisis work with borrowers.
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