Ukrainian Banking System

The creation of an entirely new banking system in Ukraine stems from the Law “On Banks and Banking” passed in March of 1991. According to this Law the Ukrainian Banking system is defined as two-tier structure consisting of the NBU and commercial banks of all types and forms of ownership. Since the very first day the activities of the NBU have been aimed at strengthening the position of Ukraine on the global level.

National Bank of Ukraine is the central bank of Ukraine. It was created when the country became the independent state. According to the Constitution of Ukraine, the administration of the National Bank includes the NBU administration and the Council of the National Bank. NBU Council consists of 14 members, 7 of which are elected by the president, and the other 7 – by the Verkhovna Rada. The Chairman of the Council is elected by its members; the head of the NBU is adopted by the Verkhovna Rada after the submission of nominations by the President. According to the Constitution of Ukraine, the main function of the National Bank is to ensure the stability of Ukraine's monetary unit. To carry this out the National Bank fosters the stability of the banking system and, within its competence, price stability.

The National Bank also works in order:

• to determine monetary policy;
• to issue the national currency of Ukraine on a monopoly basis and to organize its circulation;
• to establish the rules of conducting banking transactions, accounting and reporting, protection of the information;
• to determine the areas of the development of modern electronic banking technologies;
• to exercise the banking regulation and supervision;
• to keep a Register of banks;
• to compile, analyze and forecast the balance of payments;
• to ensure the accumulation and custody of the gold and currency reserves;
• to organize the collection and transportation of bank notes, coins and other values.

It is the bank of the banks. The NBU gives short term credits to commercial banks. Also it makes loans for banks with liquidity problems thus it is the lender of last resort.

The second level of Ukrainian banking system consists of commercial banks and state-property banks. There were two state-property banks till 2008. They were UkrEximBank and specialized saving bank. After the financial crisis three banks were recapitalized. They were Rodovid Bank, Kyiv Bank and Ukrgazbank. The state of Ukraine has the majority stake in each of them, that is 51 %. Commercial banks are divided into banks with Ukrainian capital (e.g. First Ukrainian International Bank Private Bank), with foreign capital (e.g. Erste Bank – Switzerland, OTP Bank - Hungary) and mixed (e.g. Raiffaizen Bank Aval, UkrSoc Bank).

Ukrainian banking system suffered from the financial crisis in 2008-2009 and every Ukrainian should hope that it wouldn’t repeat past mistakes.

Notes: stem – брати початок

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