NBU head calls on financial service market, securities commission to purify non-bank financial sector

Governor of the National Bank of Ukraine (NBU) Valeriya Gontareva has called on two other regulators of the financial market – the National Commission for Securities and the Stock Market of Ukraine, and the National Commission for Financial Service Markets Regulation, to follow the example of the NBU and purify theirs markets from unfair players.

"We’ve carried out purification – the things that our colleagues should do, as they only start this in their sector… We’ve finished, but they did not start," she said at a meeting of the parliamentary financial committee in Kyiv on Wednesday.

"Insurance business: look how many out of 400 companies are real insurance companies – maybe around 40. The national commission for financial service markets regulation exists. What did it do?" Gontareva said.

She added that the stock market is in the same situation as around 800 brokers have licenses, and many of them work with bogus securities, boosting their price on stock exchanges.

Gontareva said that the NBU is finishing completing the purification of the banking sector, removing 53 banks from it and cutting their number to 128. She said that at present, banks with 95% of assets would be considered sound.

In turn, head of the National Commission for Financial Service Markets Regulation, Ihor Pashko, and head of the securities commission, Tymur Khromayev, said that the regulators do not have the same powers to purify the market as the NBU has.

"The financial service markets commission does not really have tools to purify the market. What we can do is to introduce temporary administration, but it does not resolve problems," Pashko said.

He said that the commission has drawn up a draft law on authorizing the regulator with the right to initiate bankruptcy of professional market players and transfer insurance and other portfolios to solvent companies.

Pashko also said that in the past four months the commission recalled over 60 licenses from insurance companies and other financial organizations.

Khromayev said that the long procedure of agreeing legal acts and a ban to conduct checks sharply narrow the opportunities of the securities commission. He said that the document of the commission on establishing signs of fakeness of issuers of securities was agreed for four months.

He also asked the parliamentary profile committee to support the proposals of the regulator to strengthen its institutional status, giving it the right to investigate and cancel the necessity of agreeing legal acts.