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Money and credit - Ivanov VM

25.5. Supervision of the activities of commercial banks

National Bank of Ukraine supervises the activities of commercial banks and their branches, subsidiaries and representative offices in Ukraine. It is aimed at ensuring the stability of the banking system, protect depositors' interests by reducing the risks of commercial banks. The content is determined by the supervisory authority established by the Law of Ukraine "On Banks and Banking Activity".

The surveillance system is aimed at reducing external and internal bank risks.

External risks include:

• liquidity risk (the inability of the bank to ensure uninterrupted payment of its obligations to customers);

• currency risk (losses from adverse changes in exchange rates in the open currency position);

• interest rate risk (losses from changes in the interest rate set by the NBU loans under fixed interest rates on loans);

• risk of securities (losses from exchange rate of securities held in the bank's portfolio).

The internal risks referred business relating to the human factor risks (staff qualifications and business acumen leaders performing discipline, the quality of the auditing services and others.), As well as operational and technical risks, reflecting the degree of health systems to provide the inner workings of the bank: the security system, accounting, material and technical means of communication, and so on. n.

The decrease in internal risks are directed banks registration, licensing, audit, inspection, commercial bank National Bank employees.

Oversight function provides the Office of Banking Supervision NBU. on regional management of the NBU carried out surveillance operations in accordance with bringing them to the program, the individual tasks of the Office of Banking Supervision.

Commercial banks are required to submit monthly balance of NBU following information:

• balance with the economic standards for calculating the application;

• a report on the credit portfolio;

• a report on the securities portfolio;

• a report on the currency and the foreign currency position;

• a report on the interest rate risk;

• to provide a report and repayment of the loan the bank's insiders.

In addition, the commercial bank is obliged not later than 5 days after the registration of the conclusions of monthly or annual inspection of the NBU to submit a report on the external audit work, and the following day after registration of the corresponding loan agreement - a report on the "big" loans. Banking Supervision Department may also require a bank to provide any other information required to perform his duties, even if it is related to a bank official or commercial secret. However, the information may not be disclosed without the consent of the commercial bank.

Work on Banking Supervision is differentiated in three main areas: general supervision, intensive supervision and a high degree of supervision.

General supervision applies to stable working banks are financially stable, observe prudential standards, current legislation and guidelines NBU, have a good business reputation. It is carried out regional management of the NBU. General supervision is monitoring compliance with prudential regulations and other inspection reports submitted by banks. Information about the detected violations sent to the NBU Board for appropriate action.

Intensive supervision applies to banks that periodically violate economic standards, as well as commit other minor violations, no different financial stability.

Supervision is carried high on banks that systematically (ie. E., Two or more times during the quarter) violate prudential standards and commit other grave violations, or their financial situation is unsatisfactory.

When deciding on the use of intensive supervision and surveillance of high degree, NBU Banking Supervision Department conducts inspections of banks and their branches, subsidiaries and representative offices, aimed at identifying the causes of violations and shortcomings in the work of the bank. NBU inspectors checking the legality of the operations, activities of internal and external audit, state registration, the accuracy of the reports, founders and other documents. As a result of the inspection is sent to the bank's management information in which the reasons for the shortcomings identified, assessed the financial position of the bank, its capabilities and the ways out of this situation. NBU requirements are binding.