NBU reshuffles responsibilities of board members

The board of the National Bank of Ukraine has approved
the redistribution of powers and responsibilities among its executives,
according to an NBU report on Oct. 21. Among the major changes involved the
functions of licensing and supervision of the banking sector being shifted to
the control of the NBU governor (Kyrylo Shevchenko) from the first deputy
governor (Kateryna Rozhkova). Meanwhile, Rozhkova will be responsible for the
methodology for the regulation of banks and non-banking financial institutions,
as well as the protection of consumer rights. The NBU attributed such changes
to the extension of its power to regulate the non-banking financial sector (the
so-called “split” law that
liquidated the separate body responsible for non-banking financial company
regulation, adopted a year ago and effective since July 2020).

Recall, last week, local media reported that the NBU
Council might dismiss Rozhkova at its meeting on Oct. 16, while the meeting was
postponed at the last minute. In her interview released last week, Rozhkova
acknowledged that she has not spoken to Shevchenko for more than a month.
Earlier in October, the NBU Council voted to reprimand Rozhkova and another
board member, Dmytro Sologub, for breaching the regulator’s communication
policies. Such a move was criticized by Ukraine’s Western partners, including
the IMF, the U.S. and the EU.

Alexander Paraschiy: The NBU board’s move effectively means Rozhkova has been deprived of
her key functions, which were the most powerful at the NBU. In our view, this
is a positive development, as it reduces the need to dismiss Rozhkova from her
position, despite an apparent conflict between her and Shevchenko. In this way,
the current personnel structure of the NBU board might remain unchanged for
some extended time, with minimal loss to the NBU’s functionality and minimal
damage to Ukraine’s relationships with its Western financing partners, who have
expressed their concern about pressure on Rozhkova and Sologub.