The National Bank of Ukraine (NBU) has determined the criteria for writing off impaired financial assets of banks from reserves for expected losses, which will allow banks to get rid of non-performing loans, the central bank’s press service reported. .
“A bank may write off impaired financial assets in the absence of reasonable expectations of their recovery. The write-off occurs if the reserve has been established for such an asset in accordance with IFRS 9 Financial Instruments in the sum total of its carrying amount and if one or more of the following criteria apply: the debt or part of it is past due for more than 36 months; the bank has not received any significant payments in the last 36 months (more than 10% of the book value of such an asset); the bank did not receive significant proceeds from the sale of the pledge or the enforcement of the security, or the bank did not have access/ repayment/recovery of collateral in the previous 36 months; the bank has not sold such collateral financial asset three times in a row; the bank has information that the debt on this asset has been canceled by another bank “, we read in the report.
She notes that the bank does not have the right to determine more favorable criteria for writing off the impaired assets of debtors related to the bank.
The NBU noted that the write-off is not debt forgiveness. The bank can continue to settle the debt to collect it.
Banks are responsible for analyzing impaired assets for the presence of these criteria and rating them each year, starting in 2020, until October 1. Relevant information must be provided to the National Bank of Ukraine by November 1 of the current year.
These criteria are defined by Resolution No. 49 of the Board of Directors of the NBU of April 13, 2020 on determining the criteria for writing off impaired financial assets of Ukrainian banks at the expense of valuation reserves for expected credit losses. The resolution enters into force the day after the day of its official publication.