The National Bank of Ukraine offers changes in the liability of related-parties of banks and disclosing information about their owners

The National Bank of Ukraine is working on the development and implementation of the provision on liability of persons who caused bank losses by their unlawful actions. This provision will be enshrined in the Draft Law #2085 "On Amendments to Certain Legislative Acts of Ukraine regarding Liability of Related-Party", adoption of which is a necessary condition for the first IMF tranche in March this year. It was informed by Mr. Leonid Antonenko, Head of the NBU Registration & Licensing Department, during a meeting with representatives of the American Chamber of Commerce’s Banking & Financial Services Committee.

According to Mr. Antonenko, in case unlawful decisions by a certain bank in favor of its related-parties are proved, benefits obtained as a result of such decisions, shall be collected upon court decision. Currently, the World Bank together with the Regulator are finalizing the wording of this provision. Also it is planned to implement a number of measures aimed at improving the disclosure the information on banks owners. Thus, the Draft Law provides new disclosure requirements on the ownership structure of a bank.

“All levels of corporate ownership rights of the bank down to the final ultimate beneficial owners are subject to disclosure. If a corporate entity in the ownership structure of a bank has more than 20 individual shareholders, the 20 largest of them shall be disclosed. Also disclosed shall be each corporate entity that owns more than 2 percent of shares of a bank or of a direct or indirect shareholder. The Regulator fully supports these proposals of the World Bank”, - said Mr. Antonenko. “Moreover, if a splitting of packets to 1.99% and 0.01%, or other similar phenomena aimed at avoiding the law are observed once new disclosure requirements on their ownership structure are communicated to banks,, we will consider such cases as proof of opacity ownership structure of the bank”, - added Mr. Antonenko.

Also, according to the NBU representative, much attention will be devoted to the definition of related-parties of banks. “IMF tranche should stay in Ukraine's financial system, and not be withdrawn from it. Therefore, all gray decision-making schemes in favor of certain related-parties of banks will be impossible”.