The EBA representatives met with the Board of the National Bank of Ukraine

15/ 04/ 2022

Today the European Business Association met with the Board of the National Bank of Ukraine, including NBU Governor Kyrylo Shevchenko and his deputies – Yuriy Heletiy, Sergiy Nikolaychuk, Oleksii Shaban. Moreover, Oleksiy Lupin, Director of the Open Markets Department, and Andrii Poddierohin, Director of the Department of Payment Systems and Innovative Development, joined the meeting. Thus, the NBU Governor stressed that it is now clear that the banking system has passed the crash test; it continues to operate regularly while being liquid and stable. Nearly 70% of bank branches are now open and their number will grow in places where there is no danger for employees and customers (only 50% of branches were opened at the beginning of the war). Ukraine’s foreign exchange reserves currently amount to 27.4 billion US dollars thanks to the support of international partners - the IMF, the EU (which provided the first tranche of 600 million euros), the EBRD, etc. The total amount of aid received from international partners is 3.8 billion US dollars. There was no critical outflow of funds from the banking system during the war. On the contrary, there has been an increase in customer funds since the beginning of the war. Currently, the funds amount to +64 billion UAH. When the war broke out, banking restrictions were introduced to maintain macroeconomic stability, ensure economic activity, and prevent unproductive capital flight. At the same time, they are not permanent and will be changed depending on the situation in the country. For example, banks are allowed to resume the trade in currency for individuals from April 14. This will help to reduce the functioning of the illegal foreign exchange market. According to experts, the currency supply has already prevailed over demand. In general, the volume of net sales of NBU currency amounted to 2 billion dollars since the beginning of the war. Answering the questions of the audience, the NBU emphasized that it is now possible to transfer funds abroad for study, treatment, etc. Immediately after the end of hostilities, the NBU will fully return to the planned reforms, including the practice of inflation targeting, floating exchange rate, and so on. After all, the banking system should be one of the main drivers of economic recovery. It is important to resume business activity, to invest in the economy where possible. So, the banking system takes an active part in the Presidents initiative to support businesses such as lending to farmers, the 5-7-9 affordable loans program, etc. The plan is to issue UAH 66 billion for lending to Ukrainian companies, and UAH 30 billion for the agricultural sector (of which UAH 5.8 billion has already been issued to farmers). It is also worth noting that as of a week ago, the four largest banks showed an increase in the loan portfolio by UAH 12.5 billion. Also, in early April, the NBU appealed to the Cabinet of Ministers to resume lending to large companies in agriculture and other strategic industries, as well as to extend the lending term from six months to a year for the sowing period, etc. If a business has additional proposals, it can share them with the National Bank via the European Business Association. Surely, there are difficulties and risks in the financial system. For example, in 2022, according to preliminary estimates, Ukraine will lose at least 1/3 of its GDP. But altogether we will be able to bring Ukraine to a new level of development. The list of critical imports was discussed separately. Thus, the NBU said that currently, they do not see the need to abandon this list. At the end of his speech, the NBU Governor thanked the business representatives for their help, cooperation and support and stressed that since the beginning of the war, the NBU has received 15 billion in aid for the Armed Forces. We truly thank the NBU representatives for the professional dialogue and look forward to further cooperation.

Thus, the NBU Governor stressed that it is now clear that the banking system has passed the crash test; it continues to operate regularly while being liquid and stable. Nearly 70% of bank branches are now open and their number will grow in places where there is no danger for employees and customers (only 50% of branches were opened at the beginning of the war).

Ukraine’s foreign exchange reserves currently amount to 27.4 billion US dollars thanks to the support of international partners – the IMF, the EU (which provided the first tranche of 600 million euros), the EBRD, etc. The total amount of aid received from international partners is 3.8 billion US dollars.

There was no critical outflow of funds from the banking system during the war. On the contrary, there has been an increase in customer funds since the beginning of the war. Currently, the funds amount to +64 billion UAH.

When the war broke out, banking restrictions were introduced to maintain macroeconomic stability, ensure economic activity, and prevent unproductive capital flight. At the same time, they are not permanent and will be changed depending on the situation in the country. For example, banks are allowed to resume the trade in currency for individuals from April 14. This will help to reduce the functioning of the illegal foreign exchange market. According to experts, the currency supply has already prevailed over demand. In general, the volume of net sales of NBU currency amounted to 2 billion dollars since the beginning of the war.

Answering the questions of the audience, the NBU emphasized that it is now possible to transfer funds abroad for study, treatment, etc.

Immediately after the end of hostilities, the NBU will fully return to the planned reforms, including the practice of inflation targeting, floating exchange rate, and so on. After all, the banking system should be one of the main drivers of economic recovery.

It is important to resume business activity, to invest in the economy where possible. So, the banking system takes an active part in the President’s initiative to support businesses such as lending to farmers, the 5-7-9 affordable loans program, etc. The plan is to issue UAH 66 billion for lending to Ukrainian companies, and UAH 30 billion for the agricultural sector (of which UAH 5.8 billion has already been issued to farmers).

It is also worth noting that as of a week ago, the four largest banks showed an increase in the loan portfolio by UAH 12.5 billion. Also, in early April, the NBU appealed to the Cabinet of Ministers to resume lending to large companies in agriculture and other strategic industries, as well as to extend the lending term from six months to a year for the sowing period, etc. If a business has additional proposals, it can share them with the National Bank via the European Business Association.

Surely, there are difficulties and risks in the financial system. For example, in 2022, according to preliminary estimates, Ukraine will lose at least 1/3 of its GDP. But altogether we will be able to bring Ukraine to a new level of development.

The list of critical imports was discussed separately. Thus, the NBU said that currently, they do not see the need to abandon this list.

At the end of his speech, the NBU Governor thanked the business representatives for their help, cooperation and support and stressed that since the beginning of the war, the NBU has received 15 billion in aid for the Armed Forces.

We truly thank the NBU representatives for the professional dialogue and look forward to further cooperation.