Supporting the Deposit Guarantee Fund in Enhancing Bank Resolution Framework and Asset Recovery in Ukraine

Project Development Objective ( PDO )

This project is aimed at strengthening the institutional and technical capacity of the Deposit Guarantee Fund (DGF) through:

•  Revised Bank Resolution Framework
•  Improved asset recovery tools and capacity
•  Operational Performance Monitoring Framework


Although the DGF has made significant progress since it became the resolution authority in 2012, it is facing immense challenges that require additional support. The project focusses on key three areas:

1. The Bank Resolution Framework requires updating by adopting relevant secondary legislation to
    (a) reduce time for temporary administration, (b) introduce criteria for automatic liquidation
    of banks, and (c) criteria for prequalified investors. 
2. Selected asset recovery tools need to be added along with the required capacity. In order to
    efficiently manage bad assets from the banks that have been transferred to the DGF and
    maximize the chances of recoveries, there is a need for a transformation of the structure and
    procedures for asset recovery.
3. The DGF currently lacks a comprehensive framework to monitor its performance. The DGF’s
    current internal reporting and controlling has been unclear and there is no evidence that DGF
    management has a clear, comprehensive and up-to-date (or on-line) understanding of what is 
    happening in the current liquidations and ongoing temporary administrations. 

Activities / Output

The expected activities include the following:

1. Revising Bank Resolution Framework
    a)  Revising and drafting the relevant secondary legislation (DGF internal regulations) on reducing
         time for temporary administration; 
    b)  Assisting in drafting the regulation on criteria for automatic liquidation; 
    c)  Assisting in drafting the regulation on investor prequalification for bank resolution; and 
    d)  Providing a capacity building workshop on the deliverables. 

2. Improving asset recovery tools and capacity 
    a)  Assisting in drafting the new regulations on organizing the sales of assets of banks in
         liquidation (addressing, among other things, centralizing asset sales by type rather than
         by bank); 
    b)  Assisting in drafting the asset valuation regulation; 
    c)  Providing advice and reviewing ToRs for setting up liquidation accounting and IT systems; and 
    d)  Providing capacity building workshop on the deliverables.

3. Developing the DGF Performance Monitoring and Reporting Requirements
    a)  Developing the TOR for a new management information system to ensure proper internal
         controls along with a set of performance indicators for reporting to the Executive Board and
         for improving the efficiency and transparency at the agency; and
    b)  Assisting in drafting the regulations on new performance reporting guidance.

Expected Outcomes

The expected outcomes of the project are: 

1. Temporary administration will be reduced to 20 days; The DGF will work with prequalified
2. Centralized sale of assets will be launched that will lead to more efficiency and transparency in
    assets sales.
3. The DGF will produce the annual reports and improve its performance reporting guidelines.