On October 7, deputy Ministry of Finance Artem Shevalyov and deputy Head of the National Bank of Ukraine VladyslavRashkovan held a joint press conference presenting the draft Law of Ukraine «On financial restructuring» which was elaborated by the National Bank of Ukraine jointly with the Ministry of Finance taking into account best international practices.
The Ministry of Finance and the National Bank are actively working to revitalize the system of public finances and to stabilize the banking sector with the aim to resume the economic growth of Ukraine. To achieve that, both the Ministry and the National Bank are taking concrete measures to tackle the structural economic and financial problems.
Thus, the Ministry of Finance and the National Bank jointly elaborated a legal mechanism for the financial restructuring of loans received by legal entities. The draft Law of Ukraine «On financial restructuring» was elaborated with the objective to restore the economic activity of companies and to revive bank loans in order to pave the way for the sustainable economic growth of Ukraine.
According to deputy Minister of Finance Artem Shevalyov, the positive impact of the proposed law should reach companies, banks, citizens and the entire economy.
«Presenting this draft law, we are solving the problem of quite a few bad loans and preventing the bankruptcy risks of companies currently lacking liquidity which still can get back to normal, if we assist them in handling their bad loans. The approach we apply in this draft law would enable companies to avoid bankruptcy and to receive a chance to become solvent again thus saving existing and creating new working places for Ukrainian citizens», Mr. Shevalyov said.
So far Ukraine has not had any special legislation on the restructuring procedure for loans taken by legal entities. Financial institutions have been trying to handle their bad credits by themselves, but they are not always successful in this.
The draft law should also strengthen the banking system and restore trust to it. According to deputy Head of the National Bank Vladyslav Rashkovan, financial restructuring will help banks reduce the number of bad credits enabling them to invest additionally into the growth-oriented economy.
«The economic crises badly affected the financial situation of many companies in Ukraine. Bad debts are rising and affecting the banking capital. We are sure that civilized, not cosmetical, restructuring steps for viable companies would give security both to banks and to debtors. The proposed draft law offers effective security measures to prevent loan problems in the future and must step into force along with the package of legislation on the protection of creditors’ rights. This package was developed by the National Bank and banking community and submitted to the Parliament» V. Rashkovan said.
The draft law takes into account best international practices based on the «London approach» described in the financial restructuring regulations of the Bank of England. These practices have so far been successfully applied in Turkey, South Korea, Thailand, Serbia and a number of other countries.
The procedure of financial restructuring sets up voluntary, not obligatory, participation of all companies.
It will be implemented based on agreements with all parties and to conditions acceptable for each party.
After a public discussion and approval by the Cabinet of Ministers the draft law will be submitted to the Parliament.