The level of service of “toxic” loans portfolio of PrivatBank (Kiev, Ukraine) issued related to former owners and top management of the Bank companies and individuals, in 2018 fell to 13% from 18.5% in 2017, reported the financial Director (CFO) Anna Samarina.
“This toxic portfolio cash flow was 1 billion UAH (1 billion out of 9 billion UAH – if), and 8 billion was credited and closed reserves… In 2017 has been credited with 15 billion UAH, and received 2, 8 billion UAH”, – she told in interview to Agency “Interfax-Ukraine”.
Assessment Samarina, in the current year the service of “toxic” credit portfolio deteriorated.
“In 2019 it’s not exactly improved, it has even deteriorated: the amount of interest repayment decreased at the end of last year and today remains at the same level,” stated the CFO.
Earlier in the annual PrivatBank reported that “toxic” portfolio over the past year increased from 185,58 billion to 212,8 billion, and losses of redundancy on it – with 181,89 billion to almost 210 billion UAH. As explained Samarin, real deformirovanie provisions for “toxic” portfolio in 2018 amounted to UAH 5.5 billion, while the rest of the increase – an increase “on paper” without affecting profit and loss (P&L) in connection with the new requirements МСФО9.
“According to МСФО9 banks are required to fully recognize accrued interest and then for them to create reserves. This does not affect the P&L, has no impact on the profit… the Real deformirovanie reserves for this portfolio in 2018 is UAH 5.5 bn,” said the Treasurer.
Samarin said that in 2018, the Bank revised approaches to accounting of one asset – the factory of large tires in Romania, which at the time of nationalization was considered as the property and initially were several loans.
“With the development of the situation, it was revealed that the Bank has no property rights the ownership of this property. Therefore, the Bank changed the account, returned it (the asset – if) in the original form as it was before, when it was recognized” she said.
The Treasurer added that today, these loans are not serviced, and with the development of the situation around the collateral the Bank does not anticipate receiving any positive assessment of compensation.
“So this year was recognized as a 100% reserve, the Bank continues to gain possible compensation claim-related activity is not stopped, the assets are not written off,” said Samarin.
She pointed out that the Bank is unable to estimate the cost of this asset, since it can not obtain any documents that would confirm the value of this plant.
As reported, the government of Ukraine on 18 December 2016, citing the proposal of the Bank and former shareholders of PrivatBank, the largest of which at that time was Igor Kolomoisky and Gennady Bogolyubov, decided on the nationalization of the largest in the Ukrainian market of financial institutions. Ex-Bank owners believe carried out the nationalization in which they lost all of their shares illegal, then as Privat and the state require them additional compensation. Currently, the parties conduct litigation in Ukraine and in foreign jurisdictions.
District administrative court of Kyiv on 18 April 2019 at the suit of I. Kolomoysky declared the nationalization of the Bank illegal. The national Bank and the Finance Ministry dispute the court’s decision.
As for the factory of large tires in Romania, as it was reported, he was admitted to the balance of the Cyprus branch of PrivatBank in June 2016 at a cost of $198 million, or 4,959 billion. However, by the end of 2016 right of ownership of the Bank to the plant was not executed, and the value of its tangible assets, according to analysis by Ernst&Young, was in the range of 1.87-1,986 billion.
According to the national Bank of Ukraine, PrivatBank on April 1, 2019, by size of total assets (525,698 billion) occupied the 1st place among 77 operating in the country banks.