Military operations in the East of the country forced many enterprises to suspend or completely stop their work. Decrease in their revenue leads to impossibility to service credits opened in the Ukrainian banks. According to creditors, in case the situation worsens, part of the risks should be moved to the state.

Eastern assets

Due to military actions in the ATO zone, activity of practically all business in the area has been stopped. Shelling, interruptions in electricity, gas and raw materials supplies, in particular due to destruction of railroad tracks, led to suspension of chemical-recovery, chemical, coal, metallurgical and mechanical engineering industries of the Donbas region. Alchevsk Iron and Steel Works, Yenakiieve Iron and Steel Works, Yenakiieve Chemical Recovery Plant, Khartsyzk Pipe Plant, Avdiivka Chemical Recovery Plant and Concern "Stirol" were mentioned among the non-working enterprises.

Their stop led to shortening of operating income and as a result to inability to service the involved credits in time and in full. According to National Bank of Ukraine as of August 1, total credit portfolio of enterprises in the Donetsk region amounted to UAH 59.9 billion, and in the Luhansk region to UAH 9.14 billion.

Some banks are not taking any active measures to facilitate lives of their debtors, because they are still managing the burden.

Military grace

As a matter of fact, a lot of other institutions are already facing the fact that clients are not able to pay their debts. Not to enhance load on the borrowers and not to worsen their solvency the bankers offer them a grace period. "In June the enterprises were still working, but in August many of them suspended their activity. We prepared for such situation and we understand that these are problems not with solvency of the client, but with his operating activity, says Chairman of the Board of FUIB Serhiy Chernenko. – For almost all our debtors we provided credit vacations for three months. For some we allowed not to pay the amount of loan, for some the percentage, for some we partially reduced loan rate."

Some borrowers are able to return the loan in full, as they have business in other regions as well. As a rule, we carry individual negotiations with each of them.

Counting on the State

If after the end of the grace period the situation in the region will not improve, reaction of the National Bank of Ukraine will be needed. "National bank allowed not to take reserves formed for problems in these areas in the account while calculating the norms. Though, if the situation will worsen, this issue will have to be solved on the state level", says Serhiy Chernenko.

Full version of the article is available on the website Finmaidan.