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NBU and DGF Start Stage II of Pledged Assets Sale at Dutch Auction

27 September 2018

Press Release

 

The National Bank of Ukraine and the Deposit Guarantee Fund start the second stage of Dutch auctions to sell receivables pledged with the NBU under loan agreements of insolvent banks. The book value of the receivables is UAH 11.5 billion and they were previously put for sale by asset sale advisers First Financial Network (FFN) and The Debt Exchange (DebtX) within the framework of a pilot project of asset package sale.

 

At the first stage, the DGF sold these assets in separate lots in ProZorro.Sale system applying the “Dutch model”. As a result it sold loans to the book value of UAH 819.6 million.

 

Now the receivables which were not sold at the first stage are grouped into pools and entrusted to DebtX Ukraine LLC (a subsidiary of DebtX) and First Financial Network Ukraine LLC (a subsidiary of FFN) to be sold at a Dutch auction under the joint pilot project run by the NBU and the DGF since early 2017.

 

Director of the Risk Management Department at the NBU Ihor Budnyk said that, starting on 24 September, all potential buyers could access the virtual data room of First Financial Network Ukraine LLC, which already contained the details of the loan pool, conditions, and procedure of the electronic auctions.

 

DebtX Ukraine LLC is also expected to open a virtual data room in two-three weeks. We hope that the second stage of Dutch auctions to sell the loan pools will be successful and will allow selling them at their market price,” Mr Budnyk added.

 

As a reminder, two pools were put for sale under the said pilot project in September 2017 – these were the receivables under loans of insolvent banks pledged with the NBU. Two companies were engaged in the sale – DebtX Ukraine LLC and First Financial Network Ukraine LLC. The DGF set the initial prices at UAH 600 million and UAH 810 million respectively. However, the auction failed as no bidders registered for the auction for one of the pools and price bids were much below the initial price for the second one. In view of the above, the Executive Directorate of the DGF decided to sell these loans in separate lots at a Dutch auction. Having received the decision of the DGF Executive Directorate, the NBU, as the pledgee, approved the conditions to sell the assets which it held as a pledge.

 

Over the incomplete nine months of 2018, the NBU has received UAH 2.1 billion of repayments on refinancing loans of insolvent banks, which is almost four times the amount received in the same period last year. Of this amount, UAH 373 million came from selling assets at Dutch auctions.

 

For reference

Asset sale advisers First Financial Network (FFN) and The Debt Exchange, Inc. (DebtX) provide a range of services for selling loans, including due diligence of the loans to be sold, preparation of marketing materials, attraction of potential buyers, creation of virtual data rooms, and organization of auctions.

 

ProZorro.Sale is a platform where accredited auction organizers hold electronic auctions to sell any kind of property.

 

Dutch auction is a type of auction that envisages a descending bid price.


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Last modification   27.09.2018