RESOLUTION OF BOARD OF THE NATIONAL BANK OF UKRAINE

of April 13, 2020 No. 49

About approval of the Regulations on determination of criteria for write-off of the depreciated financial assets of banks of Ukraine at the expense of provisions under the expected credit losses

According to Articles 7, of 15, of 41, 56 Laws of Ukraine "About the National Bank of Ukraine", to Articles 68, "About banks and banking activity" the Board of the National Bank of Ukraine DECIDES: 69 Laws of Ukraine

1. Approve Regulations on determination of criteria for write-off of the depreciated financial assets of banks of Ukraine at the expense of provisions under the expected credit losses (further - the Provision) which is applied.

2. To banks of Ukraine:

1) to develop and approve internal procedures to (edited)/make changes to internal procedures (rules) on establishment of technique of write-off of the depreciated financial assets at the expense of provisions under the expected credit losses taking into account requirements of the Provision;

2) annually, till January 1 to perform the analysis of the depreciated financial assets regarding availability of criteria and to write off such assets at the expense of provisions under the expected credit losses according to requirements of the Provision;

3) No. 124 Is excluded according to the Resolution of Board of the National Bank of Ukraine of 25.11.2021

3. To accounting department (Bogdan Lukasiewicz) after official publication to inform banks information on adoption of this resolution.

4. To impose control over the implementation of this resolution on the First Deputy Chairman of the National Bank of Ukraine Ekaterina Rozhkova.

5. The resolution becomes effective from the date of, its official publication following behind day.

Approved by the Resolution of Board of the National Bank of Ukraine of April 13, 2020 No. 49

Regulations on determination of criteria for write-off of the depreciated financial assets of banks of Ukraine at the expense of provisions under the expected credit losses

1. This Provision is developed according to the Laws of Ukraine "About banks and banking activity", "About the National Bank of Ukraine", "About financial accounting and the financial reporting in Ukraine", to other legal acts of Ukraine, regulatory legal acts of the National Bank of Ukraine and international accounting standards (further - IFRS).

2. This Provision establishes the main criteria for write-off of the depreciated financial assets of banks of Ukraine at the expense of provisions under the expected credit losses.

3. In this Provision terms are used in the values given in the laws of Ukraine, regulatory legal acts of the National Bank of Ukraine and IFRS.

4. The bank performs write-off of the depreciated financial assets according to internal procedures (rules) developed taking into account requirements of this provision, the legislation of Ukraine and IFRS if there are no reasonable expectations concerning recovery of financial asset.

5. The bank reflects in financial accounting of write-off of the depreciated financial assets according to the Instruction for financial accounting of financial instrument transactions in banks of Ukraine approved by the resolution of Board of the National Bank of Ukraine of February 21, 2018 No. 14 (with changes).

6. The bank determines lack of reasonable expectations concerning recovery of financial asset if on such asset the reserve under the expected credit losses (further - reserve) is created according to requirements of IFRS 9 "Financial instruments" in full amount of its gross carrying amount and there are one or several following criteria:

The delay of repayment of amount of debt or its part (the main amount of debt and/or imputed incomes) on financial asset constitutes 1) more than 36 months;

2) for the last 36 months the bank did not receive essential payments on financial asset;

3) on the financial asset provided with pledge/providing, the bank did not receive essential receipts of cash flows from implementation of the pledge/address of collection on providing or the bank had no access/repurchase right of pledge/ensuring collection within the last 36 months;

4) the bank could not perform sale of financial asset for three attempts in a row way of the opened (opened) auction (auctions) with use electronic trading systems or in a different way;

5) in bank there is information that the debt on financial asset concerning the debtor is written off by other bank.

7. The bank has the right to use other criteria concerning write-off of the depreciated financial assets which are not determined in this Provision according to the internal technique developed according to requirements of IFRS.

8. The bank has no right to determine more favorable criteria concerning write-off of the depreciated financial assets of debtors/partners which are the faces tied with bank, than for other debtors / partners of bank with similar assets.

9. The bank directly reduces gross carrying amount of financial asset for the provision account if there are no reasonable expectations concerning recovery of financial asset in general or its parts according to requirements of Items 6, the 7th this provision.

Write-off is event of derecognition of financial asset in financial accounting. The bank derecognizes the depreciated financial asset in balance if write-off is performed at the expense of provision. Write-off according to requirements of this provision is not forgiveness (cancellation) of debt.

The bank according to internal procedures can continue measures for settlement of debt for the purpose of compensation of the debt on financial asset which is written off for the provision account.

The rights and obligations of the Parties arising owing to implementation of the economic activity which is drawn up by the source document according to requirements of the Law of Ukraine "About financial accounting and the financial reporting in Ukraine" do not depend on the fact of its reflection in registers and on accounts of financial accounting.

10. For the purposes of this provision the level of materiality is determined in the amount of 10% of gross carrying amount of the corresponding financial asset.

11. The bank performs write-off for the provision account if there are no reasonable expectations concerning recovery, on such financial assets:

1) to financial asset which is estimated on the amortized cost;

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