AUB News

On April 12, a meeting of the NPL Committee of the Association of Ukrainian Banks was held, which was attended by representatives of all state banks and most commercial banks of Ukraine. The main topic of the meeting was the problem of effective management of non-performing loans, which today is an important issue for the banking sector of Ukraine.

The meeting participants emphasized the need to reduce the share of non-performing loans in bank portfolios. It was emphasized that this is one of the most important tasks today. Also discussed were problems related to reimbursement of the value of non-performing loans, including shortcomings in legislation and procedures that complicate this process.

The main aspect of the discussion was the need to develop and implement effective strategies and mechanisms to reduce the share of non-performing loans in banks. The participants noted that a large share of such loans poses a serious risk to the financial stability of banks and the financial system as a whole, therefore its reduction is an urgent task.

In addition, the importance of cooperation between banks and regulatory bodies for the effective management of non-performing loans and the development of effective strategies for their resolution was noted at the meeting.

During the meeting of the Committee of the Association of Ukrainian Banks on NPLs, the issue of using land plots as collateral for non-performing loans was also discussed. The participants noted that currently, banks cannot use land plots that are under pledge until the loans they were granted are repaid. In case of non-payment of loan debt, land plots may become a non-performing asset held by banks as collateral, which in turn will increase the share of NPLs.

A lively discussion raised the issue of the possibility of selling or targeted use of land plots, for example, renting them out, as one of the ways to reduce the share of non-performing loans in banks. Committee members also emphasized the risks and limitations of using land plots as collateral. Therefore, it is important to develop effective NPL management strategies that take into account all aspects of this problem.

President of the Association of Ukrainian Banks Andriy Dubas expressed confidence in the ability of the banking sector to overcome challenges in solving problems related to non-performing loans.

"Effective management of non-performing loans is a key task for the stability of the financial system. Our Association is ready to cooperate with all interested parties to solve this problem. Management of non-performing loans requires focus, cooperation and the implementation of innovative approaches. Only together we can achieve success in this direction and to ensure the stability of the banking system of Ukraine," he noted.

Committee members agreed on further cooperation between banks and regulatory bodies in the direction of developing effective strategies and mechanisms to reduce the share of non-performing loans in banks and ensure the stability of the country's financial system.

Key issues that were discussed at the meeting of the AUB NPL Committee:

• High share of NPLs in bank portfolios.
  Despite the reduction of non-performing loans in the banking sector, the problem of NPL remains serious, because their share in bank portfolios significantly exceeds the permissible level. This negatively affects the financial stability of banks and inhibits the development of the entire financial system of the country.
• NPL reduction challenges.
  Difficulties faced by banks in collecting debts for non-performing loans were discussed. These include deficiencies in legislation, inefficient procedures and bureaucratic barriers.
• Hand the need to develop effective strategies.
  Participants emphasized the importance of developing and implementing comprehensive strategies to reduce the share of NPLs. This may include restructuring debts, selling distressed assets, strengthening work with debtors and improving collection procedures.
• Risks to financial stability.
  A large share of NPLs can lead to the bankruptcy of individual banks and the destabilization of the entire financial system. Therefore, it is important to take measures to reduce these risks.
• Cooperation between banks and regulatory authorities.
  Participants called for increased cooperation between banks and regulators to solve the problem of NPLs. This may include joint development of strategies, improvement of legislation and establishment of effective debt collection mechanisms.