PrivatBank believes recommendations on additional capitalization by UAH 8 bln after stress test are set too high

The largest bank in Ukraine – PrivatBank (Dnipropetrovsk) – has said that the recommendations of the National Bank of Ukraine (NBU) on the additional capitalization of UAH 8 billion after a stress test is set too high, the bank's press service told Interfax-Ukraine, referring to Board Chairman Oleksandr Dubilet.

"After the stress test NBU gave a recommendation to additionally form a reserve for credits issued to companies by UAH 7.115 billion and credits issued to individuals – by UAH 884.6 million. This means that after the stress test the bank requires an additional capitalization of UAH 8 billion. We don’t agree with this assessment and we're holding consultations with the NBU on the issue," the banker said.

He said that the key position of this discussion is the difference between national and international financial standards. They assess credit risks in a different way. Ukrainian regulatory requirements state that affiliated persons with more than 10% of shares should be declared founders, while under international financial reporting standards (IFRS) – more than 20%, Dubilet said.

He said that the debt of affiliated persons on the list under IFRS totaled UAH 24.442 billion as of July 1, 2015, under national standards as of September 1, 2015 – UAH 29.78 billion.

"The bank plans to draw up a plan of measures to close the affiliated credits within three years, which is in line with the memo with the IMF," Dubilet said.

PrivatBank was founded in 1992. The bank was the largest one among the 127 operating banks in the country on July 1, 2015 by total assets (UAH 240.01 billion), according to the NBU.