On 22 September 2012 the new Deposits Insurance Law came into effect replacing the previous law regulating this matter and changing a number of related laws, including the Banking Law.

In general, the new Law reinforces the position of the Insurance Fund for Individuals' Deposits (the "Fund"), including through the transfer to the Fund of several powers that used to be in the sphere of responsibility of the National Bank. The Law is also aimed at introducing more stringent regulation of Ukrainian banks and protection of individuals from losses of their deposits.

Previously the Fund played a role of a "cash desk", which was limited to compensating the individual depositors of a liquidated bank. With the latest legislative changes, however, the Fund is transformed into an agency with rule-making powers in the regulatory system of deposit insurance and orderly resolution of insolvent banks from the market.

The legislative changes introduce new criteria for evaluation of a bank's stability. The National Bank of Ukraine will be able to classify a bank as a "problem bank" upon the occurrence of at least one of the following events:

1. bank's regulatory capital and/or other prudential ratios set by law declined by more than 10 percent during the reporting month;
2. bank is in default towards its depositor or other creditor for five or more days;
3. bank systematically fails to comply with anti-money laundering and anti-terrorism financing laws;
4. bank failed to comply with reporting or disclosure requirements, including submission to the National Bank of Ukraine and/or publication of false statements that led to significant distortions of the bank's financial condition;
5. bank systematically fails to ensure efficient functioning and/or the adequacy of the risk management system leading to potential threat to the interests of depositors or other creditors.

A problem bank is required to bring its operations into compliance with regulations within 180 days. Otherwise, the National Bank of Ukraine classifies it as an insolvent bank. In addition, amended legislation lists other events, upon occurrence of any of which a bank can be considered insolvent, namely:

1. bank's regulatory capital and/or other prudential ratios reduced to one-third of the minimum established by the legislation;
2. bank is in default under at least 10 percent of its total liabilities towards depositors and other creditors for 10 consecutive business days.

Significant changes have also been introduced to the banks' liquidation procedure. Now the Fund through its representatives, rather than a liquidator appointed by the National Bank of Ukraine, will serve as the liquidator of banks (except for liquidation according to the decision of the bank's owners),. Another innovation is that the Fund has the right to require major shareholders, supervisors and managers of the bank to satisfy demands of the bank's creditors at their expense if their act or omission damaged the interests of the bank's creditors. However, it is still early to say exactly how this rule will be applied in practice.