The National Bank of Ukraine (NBU), banking associations, banks with large amounts of foreign currency mortgage loans issued to individuals, and coordinators of borrowers' groups have agreed a memorandum to regulate the restructuring of consumer loans in foreign currency, the NBU said.
An agreement on the signing of the document was reached at an NBU meeting on Dec. 25, the NBU said. The meeting was attended by IMF Resident Representative for Ukraine Jerome Vacher.
The memorandum foresees that consumer loans debts in foreign currency not exceeding the equivalent of Hr 2.5 million at an NBU rate as of Jan. 1, 2014 (Hr 7.993 per U.S. dollar), should be converted into hryvnias at a rate as of the day of restructuring.
The parties to the memorandum agreed that the sum of the difference between the restructured debt (to which a fixed rate of 0.01 percent per annum is charged) converted from foreign currency into hryvnias, at a rate as of the day of the restructuring, and the original debt estimated at a Jan. 1, 2014 rate of Hr 7.993 per U.S. dollar will be forgiven proportionally to the repayment of the debt.
The document also suggests that an interest rate on the sum of a loan, which underwent restructuring at a rate of Hr 7.993 per U.S. dollar, be fixed for three years since the day of the restructuring at the level not exceeding the one sealed in agreements on consumer loans in foreign currency. What is more, the memorandum stipulates that fines and penalty costs charged as of the day of the restructuring be recognized as uncollectible and be written off.
The memorandum allows borrowers to switch from the annuity payment system to the classic (standard) one.
Participants in the Dec. 24 meeting agreed to set up an ad hoc commission under the NBU, which will monitor the observance of the memorandum. The agreed restructuring terms will be sealed in a separate resolution by the NBU board.
“The memorandum will become effective since the day when the law on corresponding amendments to the Tax Code of Ukraine regarding banks and individual borrowers of consumer loans in foreign currency comes into effect,” the NBU said.
