UBA Appeal for the Sale of Non-Performing Loans by Banks

2021-11-16

KYIV - November 16, 2021. The Ukrainian Bar Association (UBA) addressed an official letter to the leadership of the National Bank of Ukraine, the Supreme Court, the Administrative Board of the Individual Deposit Guarantee Fund, the Independent Association of Banks of Ukraine, and Banks of Ukraine, expressing its concern over the situation.

Despite the policy of the National Bank of Ukraine to stimulate the reduction of the NPL, the share of non-performing loans still remains high. In addition, there is no consensus on banks selling their NPLs in the judiciary. The legislative changes that have taken place, are envisaged only for banks that are in the process of liquidation, which, accordingly, creates discriminatory conditions for financial market participants. After all, both insolvent and operating banks need effective mechanisms for selling non-performing assets.

“Artificially narrowing the circle of people eligible to buy bad debts reduces competition in the market and, as a result, reduces the value that the bank receives for the withdrawal of bad debts… Under such conditions, the domestic banking sector suffers in the first place. This creates a threatening situation in which banks simply can not "recover", and bad debts hang on the balance sheets of banks,” – as stated in the UBA statement.

The Association appeals to the legal community to pay attention to the need to ensure the proper functioning of the market for the sale of NPLs by banks on the basis of international standards, among other things - and to be able to attract investment in the NPL market in Ukraine.

For more details about the appeal, please follow the link.

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