Oschadbank may joint national deposit guarantee system in 2021

The Financial Stability Council agreed on Sept. 2 a
plan to integrate Oschadbank (OSCHAD) into Ukraine’s system of deposit
guarantees, the National Bank reported on Sept. 7. Taking into account the
bank’s large deposit portfolio, implying large contributions by the bank to the
Deposit Guarantee Fund, Oschadbank will have a grace period till the end of
2023, the regulator reported. The Council’s plan will require legislation
changes, it added.

Oschadbank is the only Ukrainian financial institution
whose individual deposits, by law, are directly guaranteed by the government,
with no limits. Thus far, the bank is not a member of Ukraine’s Deposit
Guarantee Fund, which insures individual deposits for up to UAH 200,000. The
fund’s members are paying one-off contributions of 1% of their share capital
and contribute quarterly 0.125% of value of their local-currency individual
deposits and 0.2% of foreign currency deposits.

Alexander Paraschiy: With the current balance sheet parameters, Oschadbank will have to pay
to the guarantee fund a UAH 0.5 bln initial contribution and about UAH 0.7 bln
annually. This is not a big charge for the bank, which generated net interest
income of UAH 3.4 bln in 1H20. The change of the deposit guarantee profile for
the bank, with an effective decrease of the guaranteed amount, is unlikely to
affect the attitude of depositors to the bank which, as a state-controlled
entity, is considered to be a safe institution in Ukraine.