Ukraine Bank Reserve Rules Are Credit Positive: Moody's

A planned change in reserve rules for banks in Ukraine are credit positive for the lenders, according to Moody’s Elena Redko.

“On April 18, the National Bank of Ukraine, the country’s central bank, declared its intention to allow banks to unblock up to 100 percent of non-interest bearing mandatory reserves -- up from 40 percent -- for use in intraday liquidity management,” Redko wrote in the rating company’s weekly credit outlook published today. “Despite easing a prudential measure, we consider this action as credit positive for Ukrainian banks.”

“While the NBU will still maintain daily supervision of unblocked reserves, the measure will increase the banks’ intraday liquidity positions by $1.8 billion (1.4 percent of system assets) and improve profitability, as a portion of these funds are reallocated to interest-yielding assets,” she said in the note.

To contact the editor responsible for this story: Zoe Schneeweiss at zschneeweiss@bloomberg.net

Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.