How to work with non-performing loans. Experience of the state Ukreximbank
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However, Ukreximbank steadily passed the first year of the war, adapted to the new realities of work in uncertain conditions, setting rather high planned indicators for the settlement of problem debt last year.
In 2022, the state-owned Ukreximbank was able to achieve debt settlement in the amount of UAH 1.7 billion, in 2023, the proactive position of Ukreximbank, the continuous work of the NPL division, despite all the existing obstacles, gave the bank a record result of repaying problematic debt – UAH 2.7 billion.
The amount of 2.7 billion is the largest indicator of problem debt settlement in the entire history of the Bank. In general, over the past 10 years, repayments of problem debt amounted to UAH 10.1 billion.
During 2020-2023, the Bank received UAH 6.6 billion in repayment of problem debt, compared to UAH 3.5 billion in 2014-2019.
Since 2020, the Bank has started selling foreclosed property on electronic auctions together with SE “SETAM”. In total, seized property worth UAH 1.1 billion was sold, despite the fact that in the period from 2014 to 2019, the Bank received UAH 231 million from the sale of seized property.
Working with NPL – tools that work
For the stable repayment of NPLs, the bank has adapted its strategy for working with problematic debt to the new realities. For recovery, both classic instruments for problem debt settlement and relatively new ones for state-owned banks were used.
In particular, we are talking about the sale of the right of claim on loans, the participation of the bank as a buyer in auctions for the sale of property held as a pledge by the bank, cooperation with collection companies to work with debts of individuals, etc.
Restructuring. The restructuring tool not only ensured more than UAH 0.5 billion of repayments (about 20% of the total amount of repayments for the year) in 2023, but also made it possible to preserve the business of the borrower companies, which continue to conduct operations, pay salaries to employees and pay taxes.
Voluntary settlement. The total rate of voluntary debt settlement for 2023 was almost UAH 1 billion.
Private performers. Thanks to cooperation with private executors, mortgaged property worth UAH 206 million was sold.
Bankruptcy procedures. The professionalism of court practice specialists, including in the field of bankruptcy, was able to ensure the realization of pledged property in bankruptcy procedures – during the year, pledged property in the amount of UAH 0.9 billion was realized.
External legal advisors. Cooperation with experienced legal companies in the framework of forced debt collection of debtors who deliberately delayed collection processes, kept control over mortgaged property, or property auctions were conducted in violation of procedures – the property was sold at a discount of up to 90% also brought positive results. %.
Thanks to the coordinated actions of the Bank and an external legal company, the auction in the bankruptcy case of Ice Terminal LLC was declared invalid, and a new auction was held in the summer of 2023, as a result of which the mortgaged property was sold for UAH 404 million.
At the same time, the Bank incurred expenses for the services of legal companies in the event of success.
Collection companies. Thanks to the work of the collection companies involved in working with the debtors of the retail business, the effectiveness of debt repayment of such debtors has increased 3 times (4.3 million UAH of repayments due to cooperation with the collection companies).
Realization of seized property. The Bank received UAH 270 million from the sale of seized property, despite the fact that among these objects were not only those acquired by the Bank in 2010, but those that the Bank took from debtors less than a year ago.
The main obstacles to debt settlement
Settlement of debtors’ problematic debt is a rather complicated and long-term process, as the unscrupulous actions of debtors and the existing shortcomings in the legislation lead to protracted procedures and enable debtors to avoid responsibility.
The main problems in the framework of collection of problematic debt remain problems in the legal field, including:
- abuse on the part of arbitration managers – transfer of pledged property to uncontrolled and unpaid use of third parties;
- abuse of arbitration managers and exchanges during auctions – manipulation of bids, non-admission of “unnecessary” participants, cancellation of bids, etc.;
- the imperfection of the current legislation of Ukraine in terms of protecting the positions of secured creditors (votes in creditors’ committees, which influences the course of the procedure).
Taking this into account, Ukreximbank is actively working to introduce changes to Ukrainian legislation, in particular, to the Bankruptcy Code of Ukraine.
Thus, during 2023, the bank discussed existing problems in the legislation within the professional community of FinClub Ukraine, sent relevant proposals to the National Bank of Ukraine, the Cabinet of Ministers of Ukraine, the Ministry of Justice of Ukraine, etc.
At the initiative of the Association of Ukrainian Banks, a round table was held on the topic “Weaknesses of the bankruptcy procedure in Ukraine and their impact on the NPL level in the banking system”, where Ukreximbank proposed 12 changes to the Bankruptcy Code of Ukraine.
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