Memorandum on restructuring consumer loans in foreign currency (Memorandum) is already signed by the Public Council at National Bank of Ukraine (Public Council) and banks having the largest portfolio of mortgage loans to households.
According to the information given by the National Bank of Ukraine representative Andrii Dubas during the briefing today, Valeria Gontareva, Governor of the National Bank of Ukraine, will sign the document after it is signed by all the stakeholders. He also reminded that the National Bank of Ukraine coordinated the entire process and created a platform to effectively address the issue of currency borrowers.
According to him, the main aim of the Memorandum is to reduce financial burden that borrowers experience due to the political and financial crisis of 2014 that caused devaluation of Ukrainian domestic currency.
"The Memorandum is the result of a long process of discussion between public and banks of all possible solutions to this painful issue. As a result we achieved a compromise, - says Andrii Dubas. - Heads of banks speak for the need to restructure mortgage loans in foreign currency on condition of collective responsibility of business, society and the state. In its turn, the National Bank fully supports common compromise that will help to reduce tension in the society”.
Amounts due under the foreign exchange loans shall be converted to hryvnias at the exchange rate effective at the date of restructuring and the difference in amount of restructured loan resulting from a difference between the exchange rate of the currency of the loan at the date of loan restructuring and official exchange rate, set by the NBU as of January 1, 2014, shall be forgiven by the banks proportionally to repayment of the debt by the borrower.
The Memorandum covers consumer mortgage loans in foreign currency (apartments, houses, land plots for residential buildings and property rights for residential property) with a principle due less than UAH 2.5 million at the official hryvnia exchange rate, set by the NBU as of January 1, 2014.
This Memorandum opens the way for settlement of the issue of restructuring consumer loans in foreign currency. The Memorandum shall come into effect from the effective date of the law on amendments to the Tax Code of Ukraine.
According to Andrii Dubas, draft law on amendments shall include provision on abolishment of Law of Ukraine On Moratorium on Recovery of Property of Ukrainian Citizens Provided as Collateral for Foreign Currency Loans.
“The mechanism of compensation proposed to banks is banks’ provisions created against losses under those loans”, explained Andrii Dubas.
The NBU will create an Ad-hoc Commission to monitor compliance with the Memorandum and will adopt a detailed mechanism for restructuring of consumer loans in foreign currency under this Memorandum through the respective NBU Board Resolution.
"Public Council calls on all stakeholders to sign the Memorandum, which, in its view, is a reasonable decision and takes account of the proposals of the bankers and the public," - said Andrii Dubas.
The Public Council was established on June 16, 2014 in order to protect the rights and interests of bank services consumers. The Public Council includes representatives of the civil society, Household Deposit Guarantee Fund and banks associations.
The Public Council is a permanent collegial, consultative and advisory body established for effective interaction of the National Bank of Ukraine with public in order to ensure the stability of the banking system, protect the rights and interests of bank services consumers, and submit proposals for improving the legislation of Ukraine in this area.