PrivatBank assesses volume of credits issued to affiliates at UAH 190 bln
KYIV. July 4 (Interfax-Ukraine) – The real volume of credits issued to affiliated persons in PrivatBank (Kyiv) as of January 1, 2017 totaled UAH 190 billion or 97% of the total credit portfolio of the financial institution, PrivatBank Board Chairman Oleksandr Shlapak said at a press conference at Interfax-Ukraine on Tuesday.
He said that gross debt on this portfolio, including interest, amounts to UAH 198.4 billion.
PrivatBank has roughly divided the portfolio into four groups: transformed credits, the gross debt on which is UAH 132.8 billion, the leasing portfolio – almost UAH 15 billion, the credits issued in Cyprus for UAH 15 billion and the credits issued to corporate clients of the bank for UAH 36.2 billion.
Shlapak said that all of these loans have a number of common characteristics.
Firstly, the majority of borrowers are newly established companies with a negative financial condition. Secondly, the loans were issued gross violation of the legislation and internal regulatory documents of the bank were recorded. Thirdly, almost the entire portfolio is being serviced unsatisfactorily and the servicing pace is only worsening. The only exception is loans, for which there is real collateral.
"Where there is real collateral for the loan, as in the case of filling stations, the portfolio is being serviced," Shlapak said.
Fourth, all these loans were issued on the non-market terms. Fifth, most loans are no secured. Sixth, to date, the bank has almost withdrawn from settling transactions of operating companies, which actually serviced the former shareholders.
As for collateral for these loans, the entire transformed portfolio is secured with property rights, which, according to Shlapak, are essentially "air". The same situation is with corporate loans.
As for Cypriot loans, he said that they are secured a little better and only a portfolio of financial leasing is secured by real estate.
Shlapak also drew attention to the fact that the bank's auditor in its report for 2016 indicated the amount of loans to affiliated parties at the level of UAH 10 billion.
He said that the difference in the auditor's and bank's estimates is due to the fact that the auditor evaluates the portfolio according to the international financial reporting standards, which do not provide for the Ukrainian specifics.
"A Western banker can not issue a loan of one hundred million dollars to an unknown structure that does not have any collateral or turnover, as well as with a gross violation of the legislation and regulations of the central bank. Even if he tries to do this, the bank's three-level monitoring system will stop it. The Ukrainian specifics has a slightly different situation: if you give a loan to a person with non-transparent ownership structure, on non-market conditions and without collateral, then all this is called loans to affiliated persons," he said.