MANAGEMENT OF EQUITY CAPITAL OF UKRAINIAN BANKS AS AN INDICATOR OF FINANCIAL STABILITY UNDER MARTIAL LAW

Abstract

The article is devoted to the topical issues in equity capital management within Ukrainian banks under martial law. The problems of equity management in banks have been repeatedly raised by scientists and practitioners. However, without a reliable and adequate capital base, a modern banking institution cannot effectively protect the interests of its owners, shareholders and depositors, and cannot absorb systemic risks or ensure the continuous performance of its fundamental functions. The research used statistical and comparative analysis, and assessed the dynamics of both absolute and relative indicators of capitalization and return on capital in the banking system, and in terms of banks by form of ownership. The measures of the National Bank of Ukraine (NBU) to maintain the financial stability of the banking system through further capitalization and implementation of international standards for bank capital were analyzed. The main changes in the calculation of regulatory capital and its main components, capital ratios, the introduction of capital buffers and the leverage ratio were identified. Based on the SWOT analysis matrix, the directions of further regulation by the NBU of the capital indicators of the banking system of Ukraine under martial law were outlined. It was determined that banks should rationally combine record profitability, a high share of Tier 1 capital, successful implementation of international standards for capital, digitalization with the challenges of taxation, a fairly high share of problem assets and other threats caused by military actions. The study showed that the NBU will continue to improve capital requirements, it is planned to reduce the minimum capital adequacy requirements to the level of EU indicators, introduce requirements for banks to comply with capital buffers, introduce requirements for third-party risk management; develop solutions for banks to manage ESG risks; implement the Bank Recovery and Resolution Directive (BRRD), as well as introduce more complex methods for calculating capital requirements. The combination of stricter prudential supervision and a heavy tax burden (a 50% tax on profits) creates an unfavorable climate for foreign capital. Therefore, it is advisable to differentiate tax requirements. In the coming years, the author anticipates a "cleansing" of the market through further consolidation of the banking sector and the privatization of state-owned banks.