Financial sector news

The National Bank of Ukraine has updated the requirements for banks and banking groups to determine significant exposures and calculate the maximum exposure limit. The changes are another step towards bringing Ukrainian banking regulation closer to European Union standards.

The determination of significant exposures and compliance with restrictions on their size is one of the key tools for controlling potential losses of banks and banking groups in the event of credit risk materializing in relation to an individual counterparty or a group of related counterparties.

Currently, such restrictions are set by the H7 standard on an individual basis and the H7k standard on a consolidated basis. Their calculation is based on the previous approaches of the Basel Committee on Banking Supervision.

According to the regulator's press service, the updated requirements, in particular, provide for:

• analysis by banks of both direct and indirect exposures of counterparties;
  inclusion in the calculation of the maximum amount of significant exposure of the obligations of a counterparty or group of related counterparties acting as a collateral provider, issuer, or debtor for the assets of collective investment institutions, as well as the issuer of securities that are the underlying assets of derivatives;
  
• combining into a single group of related counterparties both persons related by control and counterparties between whom there is economic dependence and shared risk.
  
• In addition, the basis for calculating significant exposure limits is changing. The maximum exposure to a counterparty or group of connected counterparties will be determined in relation to the bank's Tier 1 capital, rather than regulatory capital, as provided for in the current N7 and N7k standards.

The updated requirements will be introduced in stages after test calculations have been carried out. In particular, banks must develop or refine their internal regulations by October 31, 2026, and between November 1, 2026, and February 28, 2027, they must carry out test calculations and inform the National Bank of their results. From March 1, 2027, the maximum significant exposure limit will be calculated according to the updated rules on an ongoing basis.

The deadlines for implementing the new requirements will vary for banking groups. By March 31, 2027, they must develop or finalize internal group documents, and from April 1, 2027, they must begin calculating the maximum exposure limit for the credit and investment subgroup.

The date from which banks and banking groups will have to comply with the requirement to limit significant exposure to no more than 25% of Tier 1 capital will be determined by the National Bank based on the results of test calculations.

The relevant rules are set out in the Regulation on the determination of significant exposures by Ukrainian banks and banking groups and the calculation of the maximum significant exposure limit, approved by Resolution of the NBU Board No. 161 dated December 27, 2025, which comes into force on December 30, 2025.