ICU SUPPORTS DEBT & RESTRUCTURING FORUM

ICU Group was the main partner of the Debt & Restructuring Forum, which took place on 17th May in Kyiv.

The first large scale event in Ukraine on debt & restructuring, experts from across the country as well as USA, United Kingdom, Austria, Cyprus, Romania, and Belarus came together to share their opinions on the current perspectives and challenges of the Ukraine debt market. The debate focused on the dynamics of Non-Performing Loans (NPL) markets in different countries, investment strategies in such assets, restructuring, deleveraging, and the regulatory aspects of the NPL market.

According to Giovanni Salvetti, Managing Director and Head of CIS at Rothschild, most EU investors are not aware of the significant opportunities in the Ukrainian NPL market. He argued that, from $40 bln of Ukrainian banks’ NPLs, $10 bln represents real value for foreign investors. NPLs are secured on 55-60% by liquid assets and you can get a 30% or higher return on investment. If you buy a less risky asset, you will receive a 15-20% return, which is lower, but still attractive.

However, Giovanni Salvetti and other experts at the forum agreed that Ukraine still has assets’ recovery and restructuring regulatory issues. Attendees agreed that the Law of Ukraine “On Financial Restructuring” has been a step in the right direction. Many banks have already noticed the law’s impact. Kateryna Rozhkova, Deputy Chairman of the Board at National Bank of Ukraine (NBU), noted that financial restructuring has allowed the clear up of 5.4% of Ukrainian bank’s NPL portfolio from bad assets (except PrivatBank). Mrs. Rozhkova also mentioned that NBU currently requires all banks to clear its assets from “bad loans” and real estate investments.

Andrii Stetsevych, Deputy Chairman of the Board at Oshchadbank, also insured bank’s restructuring plans of UAH 35 bln bad assets, which is about 60% from its NPL portfolio. At the same time, NBU expects to sell bad debts at the Dutch auctions.
 
Statistics on liquidated banks were provided by Svetlana Rekrut, Deputy Managing Director of the Deposit Guarantee Fund (DGF). She revealed that the 2014-2020 DGF plan assumes $1,27 bln of proceeds from liquidated banks and the sale of their assets. According to DGF forecasts, refunds are expected to amount to $0,57 bln from 2018-2020. Mrs. Rekrut explained that the DGF currently owes 93 bank’s assets with $19 bln book value and $3,7 bln estimated value.

Makar Paseniuk, Managing Partner at ICU, noted that Ukrainian NPL market is attracting a lot more international attention than it was a few years ago. “This is due to a great amount of homework that the Ukrainian government has done in terms of preparing and fixing the overall infrastructure,” said Mr. Paseniuk.