THE STRUCTURE OF THE BANKING SYSTEM OF UKRAINE

        The evolution of the national banking system in Ukraine started in March, 1991, after the adoption of the Law of Ukraine "On Banks and Banking" by the Verkhovna Rada. This law defines the structure of the banking system, the economic, organizational and legal basis for the establishment, transactions, reorganization and liquidation of banks in Ukraine.

       
The Ukrainian banking system is a two-tier structure consisting of the National Bank of Ukraine and commercial banks. The National Bank of Ukraine serves as the country's central bank which pursues a uniform state monetary policy to ensure the national currency stability.

         In Ukraine commercial banks may be founded in the form of a joint-stock company or a cooperative bank. Banks may operate as universal or specialized institutions. According to their specialization, banks may be classified as savings, investment, mortgage and settlement (clearing). Each bank may independently determine areas of its activity and specialization by types of operations. Each bank may acquire the specialized bank status when more than 50 percent of its assets are represented by assets of the same type.

The range of commercial banks activities includes receiving deposits of enterprises, institutions and households, crediting of economic entities and households, investments in securities, formation of cash balance and reserves, as well as other assets, cash and settlement servicing of the economy, foreign exchange operations and other services to individuals and legal bodies.

As of 1 January 2008, 198 commercial banks were registered in Ukraine, 184 of which  were granted licenses by the NBU to perform banking transactions.

Ukraine’s banking sector has a high level of concentration. According to the NBU data, over 50% of the sector’s total assets are held by the 10 largest banks. According to the NBU, as of 31 December 2008 the total statutory capital of domestic banks was UAH 83 billion (it’s about US $ 10 billion). Moreover, at least 53 banks in Ukraine had some foreign capital, 17 of which  were wholly owned by foreigners, and 45% of total statutory capital in all Ukrainian banks was represented by banks with foreign capital. It is significant that the top ten commercial banks include  two state-owned banks (Oshchadbank and Ukreximbank), several banks with foreign capital and one foreign bank - Raiffeisen Bank Aval.

Commercial banks require a license from the NBU to operate. For banks being registered after 4 October 2006, the minimum statutory capital requirement is EUR 10 million.

The banks in Ukraine act in accordance with the Constitution of Ukraine, the Laws of Ukraine "On the National Bank of Ukraine", "On Banks and Banking", the Ukrainian legislation on joint-stock companies and other economic entities, as well as with the normative regulations of the National Bank of Ukraine and their Statutes.