Acceptance of the Law On Protecting Property Rights of Citizens by Verkhovna Rada will make things difficult for commercial banks
The Associated Collecting Businesses of Ukraine (ACBU) considers that the acceptance of the Law On Protecting Property Rights of Citizens During the Period of Ukrainian Economy Outcome from the Financial Crisis can negatively influence on the growth of distressed assets of the commercial banks.
According to ACBU’s estimates, the present volume of distressed assets in retail portfolio of the Ukrainian banks constitutes nearly 20-25%. But with the acceptance of the Law this index can grow up to 28-30% till the end of 2009. “Acceptance of the present Law can redouble the complicated situation in the banking sector, which is connected with growth of distressed assets and impossibility to ensure issue of funds to bank depositors. Moreover, the law can stimulate some debtors, who are able to pay, for nonfulfillment of credit liabilities before the financial institutions”, - considers the President of ACBU Alexandr Ilchuk.
He says, that the participants of the market have met an opinion, that the acceptance of the present law is first of all connected with the activity of collection companies, which apply the scheme of disposing property rights (property) from debtors. But presently native collection companies work with not more that 1% of troubled cases with warrants (automobile or mortgage). “Nearly 90% of the portfolio, which is in work of the participants of the ACBU are unsecured credits”, - says Mr. Ilchuk.
Considering high probability of distressed assets growth with credit institutions in the area of secured credits, the ACBUpredicts active work of banks with collection companies under other credit products (card, cash credits and credits for SME), because credit financial institutions have strong necessity to balance the problematic portfolio.