The National Bank Adapts Its Regulations to Support Businesses

The National Bank recommended that banks actively support enterprises affected by the intensification of Russian attacks and is preparing new regulatory packages to ease businesses' access to loans. This was written by Andriy Pyshny in a column for Ukrinform. According to him, the September macroeconomic overview of the NBU recorded a deterioration in a number of indicators: in August, consumer inflation accelerated to 8,1% year-on-year, and the business activity expectations index dropped to 48,3 points. Russia's systematic attacks are damaging production, causing energy supply disruptions, and complicating the logistics of enterprises. The head of the NBU emphasized that the banking system has sufficient capacity to lend a helping hand to business in this difficult period.

In his column for Ukrinform, Andriy Pyshny noted that the difficulties of business not only affect banks' credit portfolios but also pose a direct threat to the country's economic stability and export potential.

"In conditions when Ukrainian business has become a direct target of the Kremlin's military machine, we must react in a timely manner. To preserve access to funding for viable enterprises and help them get through a period of heightened military risk," wrote the head of the NBU, Andriy Pyshny.

The regulator's head explained that the NBU has already taken concrete steps. First, banks were given detailed recommendations on supporting real-sector enterprises affected by the worsening security situation, primarily in critically important export industries. Second, a systemic adjustment of regulatory requirements has begun: two adjustment packages have been introduced — one for the agricultural sector and one for producers of goods and infrastructure projects of local communities.

Pyshny listed what these regulatory changes provide:

encouraging banks to conduct short-term restructurings of debt of viable borrowers without recognizing the borrower’s default;

temporary features for considering collateral for agricultural products, in particular increasing the liquidity coefficient and extending the loan contract validity to 18 months;

clarification of the approach to considering guarantees within the Ukraine Facility program to reduce banks' capital needs;

including in the list of acceptable collateral accounts receivable or property rights to proceeds from the sale of goods and services;

increasing the liquidity ratio of collateral in the form of guarantees from city and regional councils.

"Experience from previous crises has shown that timely actions by the regulator and banks allow reducing negative consequences for the loan portfolio. In 2022 year, despite a one-third decline in the economy, banks recognized default in only 20% of business clients," noted Andriy Pyshny.

The head of the NBU added that the regulator does not expect a significant negative impact on banks' condition, since this will be facilitated by the high adaptability of Ukrainian business and the additional flexibility of financial institutions in working with borrowers. At the same time, the proposed changes are temporary and do not waive banks' obligation to properly assess borrowers' creditworthiness.

Pyshny explained that in order to allow banks to focus on overcoming the consequences of shelling, the NBU postponed the introduction of new requirements for calculating the threshold of significant exposures — currently, pilot calculations are underway. According to the head of the regulator, these steps give banks more flexibility in applying tools to support borrowers, give businesses the opportunity to weather a period of temporary difficulties without losing access to financing, and provide local communities with options for rapid revival of critical infrastructure and preparation for winter.

Currently, according to Pyshny, the longest period of credit growth in more than fifteen years is continuing, and the number of active corporate borrowers has doubled over the last decade. This is the result of implementing the Strategy for Credit Development, according to which the NBU weighs any regulatory decisions by evaluating their impact on banks’ ability to finance the economy.

Earlier, Informator reported that the head of the NBU announced new regulatory decisions to support real business affected by military risks and port blockades. Then Pyshny wrote that the NBU plans to expand opportunities for loan restructurings and use of collateral for goods in circulation for the agricultural sector.

We also wrote that the head of the NBU recommended banks to support Ukrainian business affected by military risks and port blockades, in particular through an individualized approach to restructuring and monitoring the financial state of enterprises.

In addition, Informator wrote that the NBU raised its forecast of international reserves at the end of 2026 year to 70 billion dollars. Pyshny then explained that the growth in reserves is linked to part of the defense component of the Ukraine Support Loan program and the strengthening of the NBU's intermediary role in the foreign exchange market.