OREANDA-NEWS. On 09 February 2009 was announced, that according to the Resolution #42, adopted on 3 February 2009, the NBU will provide the unsecured overnight loans to the commercial banks no more than once a week. Meanwhile the amount of the unsecured overnight loan was restricted to 20% of the required reserves available at the requesting bank as of late January 2009 (previously 40%). Additionally, the NBU decreased the reserve requirement on the foreign currency deposits from 4% to 2% since 3 February 2009.

As Millennium Capital wrote, the initial aim of the restriction to overnight loans is to force the banks to sell the foreign currency held on their accounts, thus increasing their hryvnia liquidity. At the same time the tightening of the requirements on unsecured loans provision shows the NBU’s intention to force the domestic banks to buy government bonds, thus securing the loans, since no additional restrictions were applied to the secured overnight loans. The first sign of the above is the purchase of around UAH 3bn of the government bonds by the commercial banks during the previous week, which is the first step of refinancing the budget deficit. Millennium Capital also sees relaxing the foreign currency reserve requirement may slightly stimulate foreign borrowing, thus supporting the development of the banks with foreign capital.

Millennium Capital is an integrated financial services provider. Established in 2000 by a group of professionals with solid background in securities and corporate finance, Millennium Capital is now one of the major investment banking institutions.