1.5. BANKING SYSTEM

The banking system of Ukraine rests on the Law on Banks and Banking passed by the Ukrainian Parliament in March 1991. The system has two levels, namely, the National Bank of Ukraine and various kinds of commercial banks, including the Export-Import Bank and the Specialised Commercial Savings Bank of Ukraine.

The National Bank of Ukraine acts as a central bank implementing the country's monetary and credit policy in order to reinforce stability of the national currency.

Commercial banks are established by legal entities and individuals in the form of joint stock or limited companies. Commercial banks function by opening demand and term deposits for enterprises, institutions, organisations, and individuals, by performing other transactions with clients' funds; by issuing loans to legal entities and individuals, investing in securities, generating cash, reserves, and various other assets, by rendering cash and settlement services, doing foreign exchange and other banking transactions.

The banking business is governed by the Constitution of Ukraine, the Law on the National Bank of Ukraine, on Banks and Banking, company law, other laws of Ukraine and by-laws issued by the NBU, as well as by banks' charters.

As at 1 December 2000, 195 commercial banks were registered in Ukraine, including 28 banks partially owned by foreigners, of which 7 were 100%-owned by non-Ukrainian companies and individuals. Some 155 banks with aggregate share capital of over UAH3.557 billion actually do business in the country. A Ukrainian bank has an average share capital of around UAH23 million.

The biggest banks are PromInvestBank, Ukraina, PrivatBank, UkrSotsBank, Savings Bank of Ukraine, UkrExImBank and Aval.

The banking system of Ukraine adopted International Accounting Standards back in January 1998.

The list of main legal acts that regulate audit in banking embraces the Law on the National Bank of Ukraine, on Auditing, on Banks and Banking, the National Standards on Auditing, Code of Professional Ethics of Ukrainian Auditors (approved by decision No.73 of the Audit Chamber of Ukraine, dated 18/12/1998), Regulation No.53 of the Board of the NBU on Measures for Further Development of Banking Audit (with amendments, approved by Regulation No.288 of the NBU Board, 14/06/1999).

The Regulation on Certification of Auditors (enforced by decision No.60/5 of the Audit Chamber of Ukraine on 27/11/1997 on the basis of the Law on Auditing), the Charter of the Audit Chamber of Ukraine and Regulation on Regional Office of the Audit Chamber of Ukraine establish the terms and order of certification for auditors in Ukraine.

In addition, Regulation No.114 of the NBU Board on Approval of Resolution on Organisation of Internal Audit in Commercial Banks of Ukraine (dated 20/03/1998) and Regulation No.110 of the NBU Board on Amendments to Resolution on Organisation of Internal Audit in Commercial Banks of Ukraine (15/03/1999) govern the process of establishment and organisation of internal audit services in Ukrainian banks. To render methodical aid to internal audit services in view of requirements of the Resolution, on 20 July 1999 the Board of the NBU issued Regulation No.358 on Methodical Guidelines for Application of Standards on Internal Auditing in Commercial Banks of Ukraine.

[12.12.2000]

Official date the site was started

...