The National Bank of Ukraine (NBU) has submitted for consideration by the public the question of creating a bad bank, NBU Deputy Governor Ihor Sorkin said in an address posted on the website of the central bank.

"Such an approach to the recovery of the banking system, in our opinion, will help reduce the burden on capital, lower the costs of time, money and effort required for the maintenance of distressed assets, give banks a chance to return to normal operation and focus on their core functions, particularly on lending to the economy," reads the statement.

The National Bank of Ukraine believes that "the accumulated bad assets have a negative impact on the regulatory capital of banks, restrain the resumption of lending to the economy and pose a significant obstacle to stimulating economic growth and increasing the investment attractiveness of the country."

According to the NBU, the amount of distressed assets in Ukraine's banking system as of April 1, 2011 was 15% of all bank assets.

The National Bank of Ukraine called on all interested parties to actively participate in the discussion of possible mechanisms for the creation and functioning of a bad bank. Proposals will be accepted within a month.

Earlier, the management of the National Bank of Ukraine declared a possible reorganization of the troubled Rodovid Bank into a bad bank, which could receive bad debts solely from state-owned banks.

NBU Governor Serhiy Arbuzov said that Rodovid Bank would currently operate as a bank without the right to accept deposits, and at the end of this year, depending on its performance, a decision would be taken on the expediency of limiting its banking license.

UKRINFORM