Opening of UAH Accounts by International Financial Organisations

CMS Cameron McKenna, 
Kyiv, Ukraine, Friday, July 27, 2014

On 19 May 2014 the National Bank of Ukraine (“NBU”) adopted Resolution No 286 “OnAdoption of the Procedure for Opening of and Use of Funds on InternationalFinancial Organisations’ Current Accounts Opened by Authorised Banks” (the “Resolution”). The Resolution becameeffective on 24 June 2014 and regulates the procedure for opening andmaintaining UAH and foreign currency current accounts by InternationalFinancial Organisations (Institutions) (“IFOs”)that are entitled to open such accounts in Ukraine under the internationaltreaties of Ukraine.

The Resolution is a long-awaited development required toestablish a mechanism allowing IFOs the right to issue in UkraineUAH-denominated bonds. The IFO’s right to do so was provided for by amendmentsto the Law of Ukraine “On Securities and Securities Market” dated 04 July 2013.Until the Resolution became into effect, there was no procedure for the openingby IFOs of UAH accounts and this made it impossible for IFOs to issue UAHbonds.

Generally, the Resolution establishes the right for:

     I.       the International Finance Corporation (the “IFC”) and the Nordic Environment FinanceCorporation (“NEFCO”) to open andmaintain UAH accounts for the purposes of issuing of UAH-denominated debtsecurities and granting UAH loans (and related activities, e.g. payments undera guarantee issued in connection with UAH loans). In the case of the IFC andNEFCO, UAH loans can be granted at the account of UAH bond placements and/or atthe account of UAH received from the sale of foreign currency in the Ukrainianinterbank foreign currency exchange market;

    II.       other IFOs (including the European Bank forReconstruction and Development) to open and maintain UAH accounts for thepurposes of issuing UAH bonds and granting UAH loans (and related activities,e.g. payments under a guarantee issued in connection with UAH loans). However,such other IFOs can extend UAH loans only at the account of their UAH bondplacements; and

   III.       all IFOs to open and maintain foreigncurrency accounts for the purposes of the sale and purchase of foreigncurrency, crediting of foreign currency transferred from abroad, or other IFO’scurrent accounts, and the transfer of foreign currency abroad or to other IFO’scurrent accounts in Ukraine.  

LAW: NBU ResolutionNo 286 “On Adoption of the Procedure for Opening of and Use of Funds onInternational Financial Organisations’ Current Accounts Opened by AuthorisedBanks” dated 19 May 2014

Authors:

DanielBilak, Managing Partner, daniel.bilak@cms-cmck.com

VictoriaKaplan, Senior Associate, victoria.kaplan@cms-cmck.com

Inna Antipova, Associate, inna.antipova@cms-cmck.com