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The Secretariat's financial restructuring starts from 3 April 2017 (auto-translate)




Thursday, March 30, held a joint event in the European Bank for Reconstruction and Development and the Independent Association of banks of Ukraine, dedicated to the start of work of the Secretariat and the Arbitration Committee, which was established pursuant to the Law of Ukraine "On financial restructuring"

To support the financial sector and reduce the number of problem loans, the EBRD jointly with the Ukrainian authorities introduce a new procedure of financial restructuring.

Disappointing statistics show that non-performing loans as of January 1, 2017, is 276 billion. or 26.7% of the total loan portfolio of the banking system of Ukraine, or 11.6% of GDP. Last summer, the amount of problem loans was $ 260 billion. or 23.5% of the portfolio in the system. And two years ago, in General, only 8%. That is now very poor dynamics emerges.

To correct the situation will help the introduction of a new mechanism of financial restructuring, which is defined in the Law of Ukraine # 1414-VIII "financial restructuring". The new procedure, which is clearly spelled out in law, should contribute to the improvement of credit portfolios of financial institutions, their sustainability and competitiveness. The law gives lenders and borrowers the opportunity to restructure their loan agreement using voluntary extra-judicial procedures.

In fact, the law gives an opportunity to restore economic activity and retain jobs for Ukrainian companies that were in critical financial condition. Using mechanisms such as rescheduling, partial forgiveness of debt and conversion of debt into equity, the company will retain the business and the state, respectively, will not lose taxes which go to the budget. The law also provides a limited moratorium on the implementation of the measures lenders and protect borrowers from industries for bankruptcy during the restructuring negotiations.

The law of Ukraine "On financial restructuring" entered into force on 19th October 2016 and will operate for three years – until October 19, 2019.

Preparation of a draft Law on financial restructuring was carried out in the framework of the joint project of the EBRD and the World Bank. It is directly related to changes in the Tax code of Ukraine provides tax incentives for participants of the restructuring procedure. Such benefits will remain in force for three years.

The financial restructuring will be managed by the Secretariat which will be responsible for the maintenance of the separate procedures of restructuring. There will also be an arbitration Committee that will ensure the consideration of disputes between the parties by appointing an independent and qualified arbitrators from the approved list.

Financial and logistical support to the activities of the Secretariat will provide the NEB and the EBRD. Supervise the functioning of the new system will implement a Supervisory Board, composed of representatives of the National Bank, Ministry of justice, the Ministry of economic development and trade of Ukraine and the state "Oshchadbank" and "Ukrgazbank".

Source

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.