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OSCHADBANK: FINANCIAL RESTRUCTURING – THE SOLUTION THAT REALLY WORKS (auto translate)

In exclusive comments to the information portal Bankruptcy & Liquidation member of the Supervisory Board for financial restructuring, Deputy Director of the Department of restructuring and recovery of the savings Bank Irina Wise told how her institution used the Law of Ukraine "On financial restructuring" and that already have results.

Your Bank – is the only one of the state banks, which the subject undertook the restructuring of problem loans. Have you started this process?

The law "On financial restructuring" is important in the context of promoting a culture of restructuring in Ukraine: transparent extrajudicial statutory mechanism for debt restructuring business, which, through macro-economic factors and other objective circumstances that occurred in the country, were in a critical financial condition, however, is promising. And it is unconditional incentive for attracting new investments to Ukraine.

Indeed, the first savings Bank of the largest and the first of the state banks took advantage of the provisions of the law of Ukraine "On financial restructuring" and used the maximum set of instruments of restructuring liabilities and business activities of the debtor. And have used peredvizenie in this legal act benefits. We believe that the procedure of financial restructuring is a solution which really works, which provides the possibility of viable debtors to get out of a critical financial condition, to restore its solvency in a relatively short time. And this is a real enterprise with thousands of jobs and tax revenues to the state budget from a business that works.

Since the timing of the procedure is clearly regulated and limited (up to 180 days for the procedure and the signing of the restructuring plan), and the law provides certain actions prior to the approval of the restructuring plan, it is advisable to carry out the maximum number of preparatory activities to fit within such a limited time. Therefore, we strive to provide consent to the restructuring and, accordingly, the initiation of a procedure according to the requirements of law as to work with the debtor the questions that depend on him and the lender. Example: to assemble a complete documentation package necessary for the analysis of independent expert financial and economic activities of the debtor, including its audited accounts; to negotiate with the debtor candidacy of the independent expert; to develop possible scenarios of debt settlement to provide documentation on the analysis of the independent expert in the procedure. From experience I can say that preparatory actions can last from three to nine months and can afford to start them in the initiated procedure, we unfortunately are unable due to time constraints.

For Sberbank as a state Bank maximum transparency of the entire procedure is the main driver, the requirements for independent expert we have on the level of companies from Big-4, requirements for legal and financial adviser – only reputable top companies, requirements for appraiser of property are internationally recognised experts in the valuation of the property. Therefore, if the debtor is willing to openly engage in dialogue, to transparently show off your business and is interested not "throw" the Bank, and to be a reliable paying customer, we always gotay to negotiate and are interested in finding a compromise for restructuring.

What practical results have as of now? What are the restructuring plans for this year?

The Bank successfully completed three procedures of financial restructuring of debts of companies of VIDI Group (LLC "ViDi AutoCity Koltsevaya" and "ViDi AutoCity"), "MARIST-TRADE" and OOO "Ntako". Today is another procedure. The total amount of debt that was restructured in the framework of the law, amounts to several billion hryvnia, which is eight months the full effect of the law is a very good result for the state Bank. Moreover, according to our aggressive work plans with non-performing loans for the year 2018, we intend to rest on our laurels, but to continue the dialogue with debtors that are willing to remain on the market and conduct their business openly. It is obvious that the effectiveness of debt repayment, which we achieved through restructuring of debt, much higher than in the enforcement.

The procedure of restructuring gave us the opportunity to understand bottlenecks as the procedure itself, and some financial aspects that have been thoroughly analyzed, made conclusions, and used the response options in case of a problem.

Than restructuring the law better than restructuring, which existed prior to its emergence?

With the adoption of the law, banks were legislated effective mechanisms for the implementation of effective financial restructuring. The use of tools such as setting interest rates at a level below the cost of raising funds, a complete cessation of accrual of interest, forgiveness of debt, transfer of the debtor's obligations to the capital or to attract new investments in capital, the reorganization of the debtor, change of management and/or members of bodies of management and control of the debtor in the manner provided by law, amendments to the corporate governance structure of the debtor, and the like – all of this can now occur without the risk of recognition by Supervisory authorities of the Bank's activities are unprofitable. Separately it should be noted positive changes in regulatory calculations of banks credit risks and tax laws that are made pursuant to the requirements of the adopted law.

Objectively, the banking institutions should be interested in resolving the issue of non-performing loans through the mechanism of financial restructuring is not less than the debtors. The decision on debt restructuring in the framework of the law requires banks determined by many factors, both internal and external. Banks are subject to stringent regulator action, the state banks has its own specificity, which requires more attention to details, the overwhelming amount of non-performing loans is already either in a deep state Statute, or at the stage of execution of judgments, because we're talking about bad loans, obligations which arose before the financial crisis in 2014.

After passing from start to finish the whole procedure, we understand that there are a number of unresolved issues that make the process of financial restructuring less attractive for banks, as expected, including tax regulation. Without going into detail, I note that we together with the Independent Association of banks of Ukraine with the support of the World Bank has developed the appropriate changes and suggestions to eliminate neuregulirovannost, which I hope will be able to improve the procedure of restructuring.

The project is funded by a grant received from the European Bank for Reconstruction and Development under the Shareholder Special Fund.
The project is implemented by the administrative and financial support of NABU.