To ensure financial stability, additional requirements have been introduced for non-bank financial services market participants

Date:

In order to ensure the financial stability and solvency of the market of non-banking financial institutions, the National Bank of Ukraine introduces additional requirements for the activities of insurers, credit unions, and financial service providers engaged in trading currency values ​​in cash.

Regarding insurers

For insurers, additional restrictions are established on certain types of acceptable assets, which are taken into account for the fulfillment of regulations.

In particular, the following are excluded from the list of acceptable assets in order to comply with the regulations:

  • for all insurers (life and non-life):
    • land plots (except for those on which buildings and structures used by insurers for operational activities are located);
    • all immovable property registered and/or located in the territories of active hostilities or temporarily occupied territories;
  • for non-life insurers:
    • residential real estate is additionally excluded.

Such a step is aimed at leveling the facts of overestimation of the value of real estate, as well as reducing the amount of real estate as a low-liquid asset in the structure of acceptable assets of the insurer.

At the same time, the requirements for the insurer in terms of immovable property have been eased:

  • purchased before February 24, 2022 and lost, damaged or destroyed as a result of the negative impact of the Russian military aggression against Ukraine;
  • located in the territories of active hostilities or temporarily occupied territories.

If the presence of such property has caused the insurer to fail to comply with regulations, the National Bank will not apply measures of influence to it.

Insurers must meet the new requirements for eligible assets by June 30, 2023. In case of violation of regulations, starting from this date, the National Bank may apply measures of influence.

In addition, for insurers in connection with the introduction of IFRS 17 “Insurance Contracts”, it is proposed to specify the procedure for calculating the component standards. It was determined that the calculation of the component standards should be carried out in accordance with the data of regulatory reporting, established by the Rules for compiling and submitting reports by market participants of non-banking financial services to the National Bank of Ukraine, approved by the resolution of the NBU Board dated November 25, 2021 No. 123.

Regarding credit unions and other participants in the market of non-bank financial services

The specified requirements for the regulation of the activities of other financial service providers provide, in particular, the following:

  • in order to strengthen supervision and prevent negative trends in the credit cooperative market, it was clarified that influence measures are not applied to credit unions only if the relevant violations are caused by the negative impact of the Russian military aggression against Ukraine;
  • the use in the work of the NBU of the new list of the Ministry for Reintegration of the Temporarily Occupied Territories of Ukraine, active hostilities and temporarily occupied Russian territories of Ukraine;
  • a special procedure for temporarily suspending the activity of financial service providers engaged in trading currency values ​​in cash form, or their separate or structural divisions for the period of stay of such providers, their divisions in the territory of hostilities or temporarily occupied territories is defined.

These and other changes are foreseen by the resolution of the Board of the National Bank of Ukraine dated February 15, 2023 No. 8 “On Amendments to the Resolution of the Board of the National Bank of Ukraine dated March 6, 2022 No. 39”which enters into force on February 17, 2023.

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