NBU approves new adjusting coefficients for collateral

The National Bank of Ukraine (NBU) has approved new adjusting coefficients for assets taken as collateral under refinancing, direct repo transactions and transactions under cash storage agreements.

The coefficients have been posted on the central bank's website.

The NBU recalls that application of adjusting coefficients is intended to minimize losses with reducing the fair value of the collateral accepted along the implementation of interest rate risk, currency risk and liquidity risk.

Adjusting coefficients apply to the fair value of collateral and depend on its basic characteristics.

The National Bank in particular determines the standard adjusting coefficients for government domestic loan bonds grouped by characteristics such as the currency of par value, the remaining maturity period, the size of the coupon and the availability of additional conditions (for example, indexation or amortization).

No changes were made to only adjusting coefficients for foreign currency and NBU's deposit certificates - 95% and 100% respectively.

Also, the limiting level of reduction of the volume of pledged assets (property) at 5% was also approved.

This means that the National Bank will require the banks to have additional assets to ensure the fulfillment of obligations only if the fair value of collateral used for refinancing transactions, direct repo transactions or operations under cash storage agreements decreases, taking into account the adjusting coefficients, by more than 5%.

A decrease in the fair value of collateral within 5% will be covered by adjusting coefficients.

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