The adoption of the law on the forced conversion of currency-pegged credits to hryvnias at the exchange rate set at the moment when the credits were issued (No. 1558-1) would do damage to the Ukrainian financial and banking system and it puts under threat welfare of all Ukrainian citizens, the National Bank of Ukraine (NBU) has said.
“If all the credits issued to individuals-resident in foreign currency are converted to the hryvnia at the exchange rate of Hr 5.05/$1, the banking system would see losses of around UAH 100 billion,” NBU said on its website on July 3.
The regulator said that the implementation of the document would result in the fact that the banking system would violate mandatory capital requirements, which would require urgent additional capitalization, including refinancing by the state, and this is an additional large burden on the national budget.
“The new rules would lead to the mass putting of banks to the list of insolvent banks and the increase in expenses of the Individuals’ Deposit Guarantee Fund,” the central bank said.
The NBU said that measures foreseen in the law violate the balance of rights of the sides of credit agreements – creditors and borrowers – in favor of consumers, putting all the burden of losses only on the banking system. This not only contradicts the principles of fairness and free regulation of agreement relations by parties, but it also creates a ground for violating rights of other clients of banks – their depositors, the regulator said.
The central bank said that the ban from interfering negotiations between borrowers and banks on restructuring of foreign currency credits by the state and the NBU is stipulated in a memorandum on the economic and financial policies signed as a part of cooperation with the International Monetary Fund (IMF).
“The state and NBU must not interfere in bilateral negotiations between borrowers and banks on restructuring of currency-pegged mortgage credits. If the law is adopted, providing for the forced conversion of foreign currency mortgage loans in those in the hryvnia, the Ukrainian president will use his veto regarding this law,” the central bank said.
