In this article we write about the banking system and services, currency control and methods of payment in Ukraine.

Payment methods in Ukraine.

All international acceptable payment methods operate in Ukraine, including checks, bills of exchange, letters of credit and collection mechanisms. The most secure method of payment in Ukraine, which we recommend to start working with a new partner, is an irrevocable letter of credit.

In Ukraine, the European Bank for Reconstruction and Development cooperates on trade finance with banks:

• Oschadbank;
• OTP Bank;
• Raiffeisen Bank Aval;
• Credit Agricole Ukraine;
• Ukrsibbank;
• State Export-Import Bank of Ukraine.

Payments to Ukraine in foreign currency are made either through coverage in a foreign partner bank or in the International Settlements Department of the National Bank of Ukraine (NBU). To make payments in Ukraine in hard currency, the bank needs authorization from the National Bank of Ukraine.

All commercial banks in Ukraine authorized by the NBU are members of SWIFT (Society for Worldwide Interbank Financial Telecommunications).

Non-residents and residents of Ukraine have the legal right to send and receive payments in Ukraine in accordance with the import contract, both in foreign currency and in UAH. Foreign exchange earnings of a resident of Ukraine received under an export agreement (except for the export of services other than intellectual property rights, insurance and transport services) must be collected into the bank account of such a resident within 365 days from the date of customs clearance.

Banking systems in Ukraine.

The Ukrainian banking system consists of commercial banks of various types and forms of ownership and the National Bank of Ukraine (NBU).

The tasks of the NBU are:

• licensing of commercial banks;
• control over the activities of commercial banks;
• monetary policy of the banking system.

Commercial banks in Ukraine operate based on a license from the NBU.

According to Ukrainian legislation, commercial banks are divided into:

• general or universal commercial banks;
• specialized commercial banks.

Specialized banks include:

• investment;
• settlement or clearing banks;
• savings;
• mortgage.

In 2020, 73 banks operated in Ukraine with a total annual net profit of $ 1.5 billion. The decrease in profit of 29% compared to 2019 was caused primarily by the creation of reserves for expected losses.

The 5 most successful banks received 90% of the profits of the entire banking sector. Market leader PrivatBank earned more than 50% of this amount.

The banking sector is sufficiently capitalized. The regulatory capital adequacy of the sector for the second half of 2020 remained significantly higher – about 23% against 10% of the minimum required level. This allows banks to maintain their ability to absorb losses and continue lending to households, SMEs and large businesses during the crisis.

Kirill Shevchenko, Chairman of the NBU

In 2014, Ukraine launched a series of deep banking reforms to cleanse the sector. One of the tasks was and remains the elimination of bad loans. If 6 years ago the share of bad loans in the Ukrainian banking sector was the highest in the world, at the beginning of 2020, the total of non-performing loans is 50%, today their share is less than 40% for state and 27% for private banks.

Since 2020, the law “On Amendments to Certain Legislative Acts of Ukraine on Improving State Regulation in the Financial Services Markets” came into force. In this regard, the NBU took responsibility for overseeing insurance, factoring, leasing companies, pawnshops, credit unions, as well as other financial institutions.

Currency control in Ukraine.

In 2021, the National Bank of Ukraine relaxed the level of foreign exchange regulation and lowered restrictions on the purchase of foreign currency by Ukrainian companies and individual entrepreneurs.

Starting from July 20, 2021, Ukrainian companies have the right to purchase foreign currency in an amount equivalent to EUR 100,000 per day, without the need to provide the bank with supporting documents and bank accounts.

In the case of a foreign currency transfer abroad, regardless of the transfer amount, Ukrainian companies are required to provide the bank with an agreement and supporting documents to justify the transfer.

Foreign currency transfers abroad in excess of the established limit for the purpose of placing funds in bank accounts, investing and providing loans, as before, are limited to a cumulative limit of 2 million euros per 1 calendar year.