It’s no secret that the Ukrainian banking system is going through difficult times. One third of the banks that were in the Ukrainian banking system at the begin- ning of 2014 are no longer on the market. The process of a bank leaving the market starts with the introduction of temporary administration. And when a temporary administration enters a bank, the reliable partner of yesterday starts to behave unpredictably.
It can all collapse in a moment, primarily for the bank’s customers. From a com- fortable familiar environment you find yourself in a hostile environment. Your bank is “ill,” and it’s not known when or if it will recover. However, understand- ing what’s going on inside the bank, and outside it, will help clear up the prob- lems. Moreover, if you take the right approach, you can even turn the situation to your advantage.
Is your bank sick?
At the initial stage, the most important person in a failing bank is the head of the temporary administration, who takes over management from the sharehold- ers, supervisory board and the board of directors. By law, the duration of the in- terim administration is one month. Once that month is up, there may be one of these outcomes:
From past practice, there is a 99.9% probability that the bank will be liquidated. This means that the bank's assets will be assessed and sold. The bank’s assets include: real estate (buildings, structures), movables (vehicles, office equipment, furniture).
But credits are also assets. Your loan from the bank is an asset that can be valued and sold. Many factors affect the valuation:
security
litigation
the presence of arrears
The classic question: “what to do?”
When a loan is offered for sale, anyone can buy it. Well, almost anyone.
And with the right approach, nothing prevents a borrower from buying their own loan. However, this requires some effort. You will need to find a reliable compa- ny to represent your interests in the sale and purchase transaction of the loan. The biggest plus for the borrower is that the loan debt can be sold at a discount. In some cases this can reach 60 percent or more.
So with such a discount, you could even pay off the loan in a few months. However, to get a discount, you need to understand and take into account credit assessment methodology. What factors affect the valuation? What would reduce the valuation of your loan? When should you start acting?
For answers to these questions, it is best to consult a legal adviser who will not only help you find the answers, but also guide you along this thorny path. Whatever happens in the bank, a borrower that takes an active position can win additional benefits. And in many ways the result will depend on the personal ac- tivity of the borrower and their advisers.
Kyiv Post. Legal Quarterly.
