The National Bank of Ukraine (NBU) has pinpointed a capitalization requirement of 10 billion UAH ($262.2 million) for Ukreximbank, Pravex Bank, and MTB Bank, the NBU said in a Ukrainian Banks Stability Assessment released on Jan. 9.
This assessment, based on a three-year outlook using the baseline macroeconomic scenario, sheds light on the capital adequacy challenges faced by several banks.
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Fifteen banks demonstrated no capital adequacy concerns during the assessment, and by December 2023, two additional banks — state-owned Sense Bank and Ukrgasbank — successfully boosted their capital to meet adequacy ratios.
Ukreximbank faced an adequacy shortfall, with regulatory capital (H2) at 8.78% (below the 10% minimum) and basic capital (H3) at 4.61% (below the 7% minimum), factoring in asset quality and collateral acceptability.
MTB Bank echoed these concerns with 7.71% (H2) and 6% (H3). Meanwhile, PrivatBank showcased a stronger position at 15.61% (H2) and 14.39% (H3).
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Pravex Bank projected negative capital from the second year under the baseline macro scenario, with adequacy indicators plummeting to minus 16.51% by the third year, the assessment said.
MTB Bank anticipated a small deficit in the first year, with adequacy indicators worsening to minus 4.15% by the third year. For Ukreximbank, the ratios would decline from minus 3.67% to minus 8.04% over three years.
“Banks facing heightened capital adequacy requirements must promptly submit restructuring or capitalization programs to the National Bank,” said the report.
“These programs will reflect measures to progressively achieve the established level of ratios.”
The NBU expects these programs to focus on balance restructuring and operational efficiency enhancements.
Three banks were earlier reportedly expected to be liquidated in the near future, according to the NBU’s assessment.
The new regulations that the NBU is preparing will reportedly force the shareholders of over 20 banks to either find additional funds, partners for mergers, or to surrender their licenses.
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