Ukraine approaching European standard of EUR 100,000 in guaranteed refund payments

The relevant statement was made by Ukrainian Deposit Guarantee Fund Managing Director Olha Bilai in an interview with Ukrinform.

“We are making calculations to ensure that the Fund has the appropriate financial capacity. Steps to increase the guaranteed amount must be reasonable. After all, any changes can be implemented only when the system is ready for them financially,” Bilai emphasized.

The list of entities covered by guarantees will also be expanded. In particular, credit unions will join the system, which attract retail deposits and provide lending for small and micro businesses, performing an important function in the economy.

“Of course, when making calculations and planning the transition to European standards, we estimate not only our capacity, but also the capacity of the market, studying how this will affect it. The members of the Deposit Guarantee Fund – banks, and later credit unions – should also understand that the process will be gradual and transition to better standards will be painless for them,” Bilai added.

Transitioning to European standards involves significant changes in the work of the Fund itself. According to the Ukrainian law, payments to depositors must begin within 20 business days after the start of the bank’s liquidation, while European regulations require this period to be reduced to seven days. The Deposit Guarantee Fund usually begins payments on the 13th-15th day.

“The European system is more focused on prediction and early response to financial difficulties in the operation of banks,” Bilai explained.

In her words, with timely response, it is possible to transfer business from a troubled bank to a ‘healthy’ one “literally over the weekend.”

In the future, depositors will not even notice changes in service. They will “automatically’ switch to a reliable bank that ensures the full implementation of the contract.

Bilai also commented on a draft bill to be considered by Parliament. This document should improve the tools for withdrawing banks from the market, such as a bridge bank or the sale of a bank as a whole. This will allow the Deposit Guarantee Fund to more effectively resolve situations with insolvent banks, so that depositors and creditors are better protected and receive access to their funds more quickly.

A reminder that a total of UAH 3.8 billion was transferred to the accounts of insolvent banks controlled by the Ukrainian Deposit Guarantee Fund in 2024, and 40% of this sum came from the sale of assets through auction on the Prozorro.Sale platform.