NBU head might be dismissed soon, media report

28 July 2021

The president’s office is considering possibilities regarding the dismissal of the governor of the National Bank of Ukraine (NBU) Kyrylo Shevchenko, epravda.com.ua reported on July 26 citing its sources in the office and the NBU. Media listed four reasons for dissatisfaction with Shevchenko, including failure in negotiations with the IMF, the central bank’s intention to cease long-term refinancing for banks, as well as individual issues related to banks’ licensing and the intention of the president’s office to dismiss the CEO of Oschadbank (OSCHAD). Shevchenko’s dismissal might happen in September, when the new political season starts, epravda.com.ua wrote. Earlier this month, Financial Times also reported on the possibility of Shevchenko’s dismissal, citing its sources close to president Zelensky.


Shevchenko was elected as NBU governor in July 2020 after the voluntary resignation of his predecessor, Yakiv Smoliy, who explained his exit by political pressure. Soon after his election, Shevchenko managed to replace three (out of five) deputy NBU governors thus securing a loyal majority in the NBU executive board (consisting of the governor and five deputy governors). Meanwhile, two deputy governors who retained their positions actively criticized Shevchenko, blaming him for the concentration of power in the NBU and inefficient personnel policy. A new wave of the conflict emerged in July, with the resignations of several NBU officials who openly accused Shevchenko of concentrating power.


The need to “strengthen the governance” of the NBU is among the remaining issues in Ukraine’s talks with the IMF, according to the fund spokesman's remarks of July 15.


By law,  the NBU governor has a seven-year tenure with a limited number of reasons for dismissal during the term. Among the most relevant reasons are: governor’s request for dismissal, loss of impeccable reputation, or court ruling on a criminal offence.


Alexander Paraschiy: While some of the reasons for the presidential office to be dissatisfied with Shevchenko look solid (e.g. failure to get the IMF tranche), some others look strange (e.g. appointing the Oschadbank top management, to which the NBU has no relations at all) or unacceptable (e.g. wish of the the presidential office to affect the NBU’s decision on banks’ refinancing). The presidential office has no straightforward legal reason to dismiss Shevchenko, but there is still a possibility that he could leave his position, possibly “voluntarily” following pressure (as Smoliy did). We see such a probability as less than 50%.


The dissatisfaction of the IMF about “NBU governance” suggests the fund won’t oppose a possible Shevchenko’s dismissal much, at first glance. At the same time, taking into account that the initiative for Shevchenko’s dismissal apparently comes from the presidential office, that means the office is seeking a more loyal substitute to the NBU governor, which is a reason to worry. That said, we see a risk of the NBU losing its independence if a governor reshuffling happens. We therefore believe Shevchenko’s remaining at his position would be a more beneficial outcome for Ukraine’s financial stability.

Upcoming Events

Sep 25
USD 111 mln coupons on 2032 bonds
Sep 29
USD 1000 mln US-secured bond matures
Oct 4
FY21 annual report
All Events →