OREANDA-NEWS. October 3, 2012. In order to implement the requirements set forth in the Law of Ukraine “On Households Deposit Guarantee System” of 23 February 2012 No. 4452-VI, which came into effect on 22 September 2012, NBU Board approved Regulation on Application of the Enforcement Measures by the National Bank of Ukraine for Banking Law Violation.

The above-mentioned Regulation was approved by NBU Board Resolution No. 346 of 17 August 2012 and registered with the Ministry of Justice of Ukraine on 17 September under No. 1590/21902 (hereinafter referred to as Regulation No. 346).

The Law of Ukraine “On Households Deposit Guarantee System” and Regulation No. 346 have retained the current approaches to application of the enforcement measures by the National Bank of Ukraine determined by the Law of Ukraine “On Banks and Banking”, which were set forth in Regulation on Application of the Enforcement Measures by the National Bank of Ukraine for Banking Law Violation approved by NBU Board Resolution No. 369 of 28 August 2001.

In particular, Regulation No. 346 determines the grounds and procedure for applying the enforcement measures and imposing financial sanctions on banks, foreign banks' branches and other legal entities subject to supervision by the National Bank of Ukraine for violations of banking laws and NBU regulations.

Likewise, the Law of Ukraine “On Households Deposit Guarantee System” introduces new approaches to withdrawing insolvent banks from the market by appointing the provisional administration winding down banks that cannot be rescued. The Household Deposit Guarantee Fund has been assigned the mandate to appoint provisional administration to insolvent banks and initiate the liquidation procedure.

In order to improve the banking supervision, this Law draws a distinction between the terms “problem” bank and “insolvent” bank. In this respect, the National Bank of Ukraine has determined the criteria for classifying the bank as problem or insolvent.

The above stated changes will help ensure the smooth operation of banks, speed up the process of financial rehabilitation of banks, reduce risks and, consequently, enhance the protection of interests of bank depositors and creditors, and strengthen confidence in the banking system of Ukraine.

From the date of entry into force of Regulation No. 346, Regulation No. 369 becomes invalid. (NBU Board Resolution No. 369 of 28 August 2001). In accordance with item 3 of Chapter X of Final and Temporary Provisions of the Law of Ukraine “On Households Deposit Guarantee System”, the liquidation procedure initiated against the bank prior to the entry into force of this Law shall be subject to the Law, which was effective until the new Law entered into force.