NBU puts restrictions on loss-making banks

The National Bank of Ukraine has restricted loss-making banks from granting unsecured loans, purchasing their own shares and acquiring non-government securities, Interfax reported, citing an NBU order dated July 22. The order forbids loss-making banks from repaying their debts early, unless the debt is restructured in a way that a bank only pays 50% or less of the amount due. The NBU regulation also prohibited the distribution of dividends to shareholders and distribution of capital in other forms such as bonuses and worker incentive programs. Andrii Parkhomenko: The regulation should curb the outflow of funds from Ukrainian banking system. The regulation should also complicate the process of loans/bonds restructuring, as outcomes when the bank only pays 50% of the amount due look highly unlikely.