The application of debt restructuring mechanisms is part of banks' credit strategy during wartime.
This opinion was expressed by Olena Yermolova, risk management director and board member of GLOBUS BANK.
She noted that at the beginning of the full-scale invasion, Ukrainian banks massively implemented a "credit holiday" scheme: changes were made to repayment schedules, and monthly loan payments were deferred for several months.
“For example, all principal repayments on most car loans and mortgages at Globus Bank were deferred for 6-12 months, and for consumer loans, not only the principal repayment terms but also the interest were deferred,” said the specialist.
The banker pointed out that since the second half of 2022, banks have moved away from mass payment deferrals and returned to the usual restructuring, the main rule of which is that the loan debt should not increase, and the bank should have a certain confidence in the borrower's ability to repay the accumulated debt. Therefore, according to the expert, one should not expect to receive full “credit holidays” now, meaning the postponement of all payments to the future.
"As of May 2024, only 2.6% of pre-war mortgages and 8.5% of Globus Bank car loans are overdue by more than 90 days. Even for these loans, almost 30% of them are receiving partial payments, and there are grounds to believe that the debtor borrowers will soon return to their usual 'schedules' or the loans will be restructured. We understand that the war circumstances caught everyone by surprise, and the most appropriate decision was to implement restructuring. After all, loans that are not being repaid are a significant problem for both the borrower and the lender. Therefore, debt restructuring can be a good way out of a difficult debt servicing situation," Olena Yermolova concluded.