11:33 19.12.2015

Poroshenko vetoes law on restructuring currency credits

2 min read
Poroshenko vetoes law on restructuring currency credits

Ukrainian President Petro Poroshenko has vetoed a bill on restructuring loans issued in foreign currency (No. 1558-1) and suggests that the bill should be rejected, according to a posting on the Verkhovna Rada's official website.

"According to the NBU [the National Bank of Ukraine], individuals who are residents of Ukraine have borrowed $4.28 billion in currency credits as of today, <…> the sum of all mortgage loans is $2.16 billion. Should the currency loans be converted at a rate of UAH 5.05 per $1, i.e. the rate that was in effect at the moment of concluding most of the agreements on lending in foreign currency, the banking system will sustain losses exceeding UAH 76 billion," Poroshenko said in his comments on his decision on the bill.

As was reported, the bill was passed by Ukraine's parliament on July 2, after which a number of lawmakers called on the president to veto the document.

The NBU in turn said on July 3 that the adoption of this bill would do considerable damage to Ukraine's financial and banking system, posing a threat to all citizens' well-being. "If all the loans given to resident individuals in foreign currency are converted into the hryvnia at a rate of UAH 5.05 per U.S. dollar, the banking system's losses will total about UAH 100 billion," the NBU said.

Parliament Speaker Volodymyr Groysman signed the bill only after a new, government-prepared bill had been tabled in parliament to restructure mortgage loans in foreign currency, which suggests certain benefits, including for participants in the Anti-Terrorist Operation (ATO). In particular, the Cabinet proposes that individuals be allowed to restructure their loans for the acquisition of housing, which is the only one in possession of a household, along with writing off 25-75% of a mortgage loan. ATO participants will enjoy an 80-100% write-off of the mortgage loan. Such terms are applicable only if the balance on such loans was not more than UAH 2.5 million as of January 1, 2015, and there were no overdue debts as of January 1, 2014, or they had been repaid. Such loans are estimated at about UAH 20 billion, or 40% of all the mortgage loans. The proposed algorithm was supported by 19 large Ukrainian banks, accounting for 75% of the country's banking system.

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