Even more important, and far more disturbing, is that it appears the NBU may be using different stress test standards for different banks and that the differences have little to do with anything related to safety and soundness. Instead, the different financial rules and methodologies being applied may well be related to political considerations that make Biden’s words from several weeks ago even more meaningful.
The NBU’s lack of transparency on methodology and rules were of such concern that the Independent Association of the Banks of Ukraine wrote to the International Monetary Fund last month to ask that it intervene in the situation. It specifically cited NBU’s “inconsistencies” in stress test calculations, its “unreasonable overstatement and misrepresentation of stress test results” and a subsequent restatement of each bank’s required re-capitalization using new definitions of acceptable collateral that differed from those applied by IMF itself.
