Financial sector news

At its meeting on October 30, the Financial Stability Council (FSC) considered a number of key issues that will affect the development of the financial sector in the context of the war, including an initiative to increase the tax rate on bank profits to 50% in 2026.

The Council members separately discussed the possible consequences of implementing this initiative and unanimously agreed on the risks it could pose to the banking system and the economy as a whole. In particular, this refers to restrictions on the lending and investment potential of banks, which is critical to meeting the growing needs for financing the energy sector, the military-industrial complex, infrastructure restoration, and supporting the stability of the state.

During the meeting, FMC members also heard a review of systemic risks in the financial sector prepared by the National Bank. The main risk to stability remains the ongoing full-scale war, which is hampering economic recovery due to the destruction of energy infrastructure in recent months and growing budgetary needs. Despite the difficult conditions, banks continue to build up their loan portfolios, and the level of credit penetration in the economy is growing, but the need to strengthen lending remains high.
Possible ways to reduce the risks of financing the state budget and systemic risks in general were considered separately. Participants agreed to respond promptly if necessary.

In addition, the FRS discussed the concept of regulating the virtual asset market, in particular the NBU's proposed division of powers between regulators and the stages of market launch. The Council members agreed on positions for further consideration of the draft law in parliament. It is expected that by the second reading, the document will identify state bodies as regulators of the virtual asset market with a clear division of powers between them and provide for a transition period for the creation of infrastructure and a subordinate regulatory framework.