World Bank Note of the Development of a Bank Resolution Framework in Ukraine

19 Mar World Bank Note of the Development of a Bank Resolution Framework in Ukraine

In recent years, Ukraine has been the scene of one of the most severe banking crises on record. Between 2014 and 2019, the country experienced more than 90 bank insolvencies – nearly every second institution in the market failed. Since then, the Ukrainian authorities, with support from the World Bank and other international institutions, have taken decisive steps to restore public confidence, giving an important stabilization signal to the market.

As part of its Association Agreement with the EU, signed in September 2017, Ukraine has undertaken to adopt essential cornerstones of the EU legislative framework. In the area of financial services, a joint working group of the National Bank of Ukraine, the Ukrainian Deposit Guarantee Fund, and the World Bank Financial Sector Advisory Center (FinSAC) was established to develop an enhanced bank resolution framework aligned with the European Bank Recovery and Resolution Directive (BRRD). CEPA senior expert Christian M. Stiefmueller acted as Lead Consultant to the World Bank on this assignment.

Against the overall objective of compliance with international standards – ensuring effective bank resolution while safeguarding overall financial stability and reducing the likelihood of public support – the joint working group identifies current differences and proposes key measures and legal amendments required to align the Ukrainian bank resolution framework with the BRRD. It also references reforms warranted in related areas as well as certain preconditions that should be addressed in order to ensure the efficient operationalisation of a BRRD-aligned framework.

The Note summarises the findings of the joint working group. It is available, free of charge, from the World Bank website.