The National Bank of Ukraine (NBU) jointly with the Individuals' Deposit Guarantee Fund begins the second stage of Dutch auctions to sell receivables pledged with the NBU under loan agreements of insolvent banks. The book value of the receivables is UAH 11.5 billion, the NBU has reported on its website.

The central bank said that they were previously put for sale by asset sale advisers First Financial Network (FFN) and The Debt Exchange (DebtX) within the framework of a pilot project of asset package sale.

The NBU said that at the first stage, the Deposit Guarantee Fund sold these assets in separate lots in ProZorro.Sale system applying the Dutch model. As a result it sold loans to the book value of UAH 819.6 million. Now the receivables which were not sold at the first stage are grouped into pools and entrusted to DebtX Ukraine LLC (a subsidiary of DebtX) and First Financial Network Ukraine LLC (a subsidiary of FFN) to be sold at a Dutch auction under the joint pilot project run by the NBU and the Deposit Guarantee Fund since early 2017.

Director of the Risk Management Department at the NBU Ihor Budnyk said that, starting on 24 September, all potential buyers could access the virtual data room of First Financial Network Ukraine LLC, which already contained the details of the loan pool, conditions, and procedure of the electronic auctions.

"DebtX Ukraine LLC is also expected to open a virtual data room in two-three weeks. We hope that the second stage of Dutch auctions to sell the loan pools will be successful and will allow selling them at their market price," Budnyk said.

As reported, two pools were put for sale under the said pilot project in September 2017 – these were the receivables under loans of insolvent banks pledged with the NBU. Two companies were engaged in the sale – DebtX Ukraine LLC and First Financial Network Ukraine LLC. The Deposit Guarantee Fund set the initial prices at UAH 600 million and UAH 810 million respectively. However, the auction failed as no bidders registered for the auction for one of the pools and price bids were much below the initial price for the second one.

In view of the above, the Executive Directorate of the Deposit Guarantee Fund decided to sell these loans in separate lots at a Dutch auction. Having received the decision of the Deposit Guarantee Fund Executive Directorate, the NBU, as the pledgee, approved the conditions to sell the assets which it held as a pledge.

Over the incomplete nine months of 2018, the NBU has received UAH 2.1 billion of repayments on refinancing loans of insolvent banks, which is almost four times the amount received in the same period last year. Of this amount, UAH 373 million came from selling assets at Dutch auctions.