National Bank Imposes Limits On Subordinated Loans.

The National Bank of Ukraine (NBU) set a maximum interest rate for banks that attract subordinated loans denominated in USD at 12-month LIBOR+5%. At the same time EUR denominated subordinated loans can be attracted at a maximum 12-month LIBOR+7%. The hryvnia is not higher than the NBU discount rate plus 2.5% (at present, the NBU discount rate is 9.5%). Concorde Capital: Ukrainian banks actively use subordinated loans to keep their capitalization at an adequate level. This year Ukrainian banks notably intensified their fund raising activity by attracting subordinated loans from foreign banking institutions. The subordinated loan restrictions, part of the NBU?s stricter monetary policy, is aimed at limiting investment inflow through corporate borrowings. The NBU wants to avoid additional pressure on prices. The restrictions may only have a psychological effect, as many Ukrainian banks are able to draw subordinated loans at lower rates of LIBOR+3%.