For the first time since 2014, NBU’s Corporate Non-State Pension Fund reported a positive financial result. In H1 2016, the Fund earned a net profit of UAH 33.3 million.

In H1 2016, the bulk of the Fund’s income came from:

• Gains from portfolio investments and interest income on deposits.
• Gains from debt restructuring operations - UAH 8 million.

 “In the past two years, the new management team of the Fund has been involved in efforts to bring the Fund back to profitablity and we achieved this goal in the first half of 2016,” said Director of the NBU’s Corporate Non-State Pension Mr Oleh Kurinnyi.   

Mr Kurinnyi said that the Fund’s present management team managed to restructure non-performing loans, initiate debt collection procedures to recover nonperforming loans and from 21 March 2016 adjust the value of the Fund’s assets to the fair market value.   The Big Four audit firms, such as PWC and E&Y, carried out a fair value assessment of the Fund’s balance sheets in line with IFRS. 

Thus, the fair value of assets as of the end of 2014 amounted to UAH 775.2 million (the carrying value totaled UAH 1,612.2 million), as of the end of 2015 – UAH 968.7 million (the carrying value – UAH 1,007.3 million). The discrepancy between the carrying value and fair value of assets  has been eliminated through the application of IFRS for fair value measurement and made UAH 984.6 million.

“Currently, assets already were revaluated in line with IFRS, the assets clean-up was finalized and no planned decrease in value to be forecasted, - notes Mr Oleh Kurinnyi. Fluctuations of the assets fair value are posiible only due to market drivers: change in credit rating of corporate bonds issuers, UAH/USD exchange rate fluctuations, change of deposit interest rates on deposits and state bonds.”

 Within the current assets structure of the Fund liquid and trusted assets with low risk-level prevail:

• Internal State debt bonds - 37% of assets;
• Deposits in state banks and state controlled banks - 36.2% assets.

During investment portfolio clean-up numerous fraudulent schemes for funds withdrawal by the previous managemnent of the Corporate Non-State Pension Fund of the National Bank of Ukraine were revealed.  The State Security Service of Ukraine initiated criminal proceedeings due to the fact of embezzlement and legalization of money by ex-officials of the Corporate Non-State Pension Fund of the National Bank of Ukraine. According to the law enforcement bodies, the Fund’s officials developed illegal scheme for embezzlement of institution’s finds and transferred over UAH 600 million to accounts of commercial entities. Funds were aimed at purchase of securities from issuers bearing all fictitious characteristics. Currently, these cases are under investigation.

 Greatest damage was caused to the Fund by investments to bonds of group of five related companies 2011-2014.  Writedowns of these securities in the reesul of failyre to fulfill obligations regarding payment of interest made over UAH 350 million. To this group refer the following related legal entities:

• Mik Mega LLC - meat processing plant;
• Triumf LLC - vegatable storehouse;
• Elekrokhimprom LLC - copper powder production plant;
• Ekovite LLC and Sonet LLC are intermediary companies, with assistance of which the attraction of financing for building of the abovementioned objects was carried out. 

Generally, illegal acts of the former Fund’s management brought to loss in the amount of UAH 900 million approximately.

NBU closely cooperates with law enforcement bodies, which investigate cases on withdrawal of funds from the Fund by the formemer management, and hopes to bring the guilty ones to responsibility as soon as possible.

For reference

NBU Corporate Non-State Pension Fund was established in 2007. Number of the Fund participants as of 1 July 2016 is 12 267 employees of the NBU system. Fund is the largest in Ukraine, its value makes 51% of value of all non-state pension funds, and is the most trusted  non-state pension fund both by assets structure and management system. From 21 March 2016 with the respective NBU decision, the new accounting policy was established, according to which assets accounting is performed in line with IFRS.