The transition period in the financial and insurance market continues
The transition period in the non-banking financial market after the transfer of the functions of its regulator from the National Financial Service Commission to the National Bank of Ukraine (NBU) is ongoing from July 1, 2020, and it will take about a year to restore order, said Deputy Chairman of the NBU Dmytro Oliynyk – curator of the “Prudential Supervision” vertical.
“At the current rate of work, it will take us about a year to bring order to the non-banking financial market. Key changes for non-banking financial institutions are expected next year, when the package of regulatory legal acts of the National Bank for financial companies, insurers, lessors, pawnshops and credit unions will come into force,” – he said in an interview with the Interfax-Ukraine agency.
Oliynyk added that from the point of view of the supervision structure, the requirements will be significantly strengthened regarding the implementation of regulations, reporting, corporate governance and the system of risk management and internal control.
“The problem of the non-banking market is the ‘low’ entry threshold, overly liberal requirements. Many companies work on borrowed funds. This creates risks,” said the Deputy Chairman of the NBU.
He reminded that in the European Union, where Ukraine aspires, a number of countries have set requirements for minimum capital for non-bank financial institutions up to EUR5 million.
“We are considering the possibility of tying the level of capital to the size of the business. The legislation gives the NBU such powers,” Oliinyk said.
Commenting on the recent changes in the structure of prudential supervision of the National Bank, the curator of this vertical of subordination emphasized that the main goal – supervision should be concentrated in the plane of the greatest risks and work to anticipate problems.
According to him, the functionality of the newly created department of integrated supervision of banks has been fundamentally revised. “We have created competence centers for the main areas of risks and business models. We have introduced the function of in-depth risk analysis. We have grouped supervisory teams for the supervision of groups of banks with similar business models,” explained the deputy head of the NBU.
He added that the new department, in addition to banks, supervises payment service providers in accordance with the new legislation in this direction. All these changes are aimed at further deepening the risk-oriented approach in supervision and are foreseen by the program with the International Monetary Fund, Oliynyk noted.