Ukraine took the 3rd place in the world in number of troubled loans

Украина заняла 3 место в мире по количеству проблемных кредитов

According to the rating of the World Bank Ukraine up to 2015 took 3rd place among the countries with the largest number of problem loans. Ahead of Ukraine in the rating is only Greece and Cyprus. The world Bank estimated the number of problem loans in the banking system of Ukraine by the end of 2015 at the level 24,27% of the total number of loans. For comparison: in 2013 the share of problem loans was at around 12.9%. Then Ukraine is at the level of problem loans was even better than Italy and Spain. And now Ukraine has become one of the most problematic countries in the banking sector.

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In many ways, the victory in the rating is a merit of the head of the NBU Valeria Gontareva. Prior to joining her as head of the NBU in Ukraine was not so much of problem loans. But its policy to “cleanse the banking system of toxic assets” gave quite poor results. The number of problem credits has not decreased, but increased.

The very idea Gontareva on the mass closure of Ukrainian banks was foolhardy and pointless. Once Gontareva started to close banks, while not thinking about clients of banks, mass defaults on loans. Many entities have lost money in banks that were liquidated. In addition, I worked the “Domino principle”. This is when a legal entity, having lost money in the liquidated Bank are unable to pay to its counterparties in the Bank, which still worked. As a result of a legal entity, even working in banks, became insolvent and stopped paying on loans.

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Now the NBU is lobbying for the adoption by the Verkhovna Rada of the law on restructuring bad loans. Thus Gontareva promises to unlock lending to Ukraine. But, rather, it is simply an attempt to save the situation by the “put out the fire with kerosene”. By itself, the bill offered by the NBU, is very controversial, and has many “gotchas” that can in practice lead to problems with toxic assets, and to leaching of assets in major state-owned banks. For a large number of bad loans in major state banks. If you do write off these “toxic assets”, as proposed by the draft law, the NBU, it will lead to the fact that the banks will just show negative equity, and will need again to rescue banks at the expense of emission of the hryvnia. All by itself the law on restructuring bad loans is clearly not intended to revive lending, and aims to solve a number of problems for individuals. Maybe that’s why deputies decided to send the bill for revision that caused unprecedented anger of the NBU.

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Need as quickly as possible to resolve the issue with problem loans. But you need to change the methods of work of the NBU. It is important now to restore the confidence of business and population to the banking sector. To restore normal operation of the banking sector of Ukraine you can use different methods, including the methods that are used in the US and the EU. This may be true sanation Bank, as in the EU. It can be special investment funds, and securities, as in the United States. Can be and combination options. In any case, methods much. But you need to make the right moves and think with your head. But if this is not done, Ukraine will continue to be among the “anti-heroes” in the world rankings. And all the talk about reforms and investors will remain only conversations.

Alexander Okhrimenko

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