Banks with negative equity should complete additional capitalization by Feb

"The first 10 banks should do this by the end of November and another 10 by the end of January," Pysaruk said commenting on the deadline for banks' additional capitalization, an UNIAN correspondent reported.

In his words the diagnostics under a four-year Extended Fund Facility program with the IMF is under way at 20 selected banks.

"The NBU is monitoring closely the implementation of banks' recapitalization plans and will update assessments to identify new losses," the Ukrainian authorities said in a Letter of Intent to the IMF dated July 21, 2015. The document was signed by President Petro Poroshenko, Prime Minister Arseniy Yatsenyuk, NBU Governor Valeria Gontareva and Finance Minister Natalie Jaresko.

Of the 18 largest banks identified by the 2014 diagnostic exercise as having capital needs, five were unable to present credible recapitalization plans and have been resolved by the Deposit Guarantee Fund, 12 have implemented their recapitalization plans as agreed with the NBU, and one large bank is set to raise the remaining UAH 2.5 billion by extending a subordinated loan that matures in September.

"Given the extraordinary events since last year, on April 24 we initiated a new round of diagnostics (asset quality review and stress tests), on the basis of TOR agreed with the IMF and World Bank staff, to identify losses from the larger-than-expected exchange rate depreciation and the conflict in the east," the letter reads.

Results for the top 10 banks and 10 subsequent banks will be available by the end of August and the end of October 2015, respectively, and the recapitalization plans for each bank will be ready within three months after the bank receives its final capital need estimate from the NBU.

"Any bank that finds itself with negative equity after the diagnostics will have to bring it to positive territory as part of their recapitalization plans within the same time frame (three months after the receipt of the final capital need estimate); meanwhile, such banks will be subject to enhanced supervisory constraints, including an in situ NBU supervisor," the letter reads.

Furthermore, all banks will bring their post-diagnostics capital-asset ratios to at least 5% within six months after their recapitalization plans have been accepted by the NBU.

"We will allow viable but undercapitalized banks to temporarily continue operating with capital levels below 10% of risk weighted assets, with the 10% statutory CAR [Capital Adequacy Ratio] requirement being restored gradually by end-December 2018," the letter says.