NBU comes up with incentives for banks to invest in recovery projects

The National Bank of Ukraine adopted a set of decisions to stimulate the involvement of the banking sector in financing projects for Ukraine’s economic recovery.

That’s according to the NBU press service, Ukrinform reports.

"These steps were taken to implement the Credit Development Strategy (hereinafter referred to as the Strategy), developed by the National Bank along with the Ministry of Finance and Ministry of Economy, and approved by the Financial Stability Board on June 6, 2024. The key goal of the Strategy is to revitalize loan support by the banking sector for the restoration of priority branches of the economy amid martial law," the statement reads.

It is noted that as part of the Strategy, the NBU Board approved transitional requirements for banks toward gradual introduction of a new capital structure and requirements for its adequacy. From August 5, 2024, banks shall comply with the following standards: Tier 1 capital adequacy (Tier 1) – at 5.625%, Tier 1 capital adequacy (Tier 1) – at 7.5%, and regulatory capital adequacy – at 10%.

The updated regulations are aimed at further ensuring stability of the banking system, protecting the interests of depositors, and preserving financial stability, which is one of the important components of the country's defense capability.

Also, the National Bank established temporary features of credit risk assessment for specialized loans pending martial law and 12 months into its termination or cancellation. This was done, focusing on the plan defined by the Strategy, to revitalize the launch and implementation of new projects with the involvement of credit funds, including in priority sectors of the economy (defense-industrial complex, energy, processing industry, and agriculture), and to promote the expansion of the banking sector's participation in financing the reconstruction of energy capacities.

As reported, the Financial Stability Board approved the Credit Development Strategy, aiming to contribute to providing financial resources for the energy infrastructure recovery.