The Guarantee Fund puts up for auction bad loans of six banks: for the first time, a large consolidated pool is being sold
8 December 18:20
The Deposit Guarantee Fund has announced a major auction on December 15 in the Prozorro.Sale system, where a pool of assets of six banks will be put up for sale in one lot, "Komersant Ukrainian" reports.
This is the first time that the DGF has consolidated such an array of debt obligations for sale, which may become a test for the market’s interest in distressed retail loans.
What exactly is being sold
The lot includes 376 items – mainly claims on retail loans and receivables remaining on the balance sheets of Forward, Concord, Prominvestbank, Bank Sich, MR Bank and Megabank. The starting price is set at UAH 10.4 million, and the auction will be held according to the Dutch model, i.e. with a decrease in value.
The Fund notes that more than half of the assets – 57.4% – are consumer loans, another 35.3% are card debts, and 7.3% are accounts receivable. The average amount of debt in the portfolio varies from UAH 22 thousand to UAH 135 thousand.
None of the loans have collateral or financial guarantees, which makes the pool more risky but potentially attractive to investors specializing in buying distressed assets.
When the debts arose
The bulk of the liabilities – over 82% – were formed in 2014-2022, with about 17% of the loans issued before 2013. The most recent debts, which arose after 2023, account for only 0.6%.
Loans are overdue from three months to more than ten years.
The DGF has been gradually selling off the assets of liquidated banks for several years, but significant balances of non-performing loans delay the completion of liquidation procedures. Consolidated pools help speed up this process while testing the market’s willingness to buy large and heterogeneous portfolios.
In October, according to the DGF, borrowers repaid more than UAH 31 million under restructuring programs alone, and total revenues to the liquidated banks reached more than UAH 167 million. At the same time, the DGF continues to satisfy creditors’ claims: in October, UAH 248.5 million was allocated to them, most of which went to creditors of the seventh priority.
Auction results may show how willing the market is to absorb distressed assets
The results of the auction may show how willing the market is to absorb distressed assets in times of economic instability. If interest is high, the DGF may continue to use the consolidated sales model, which will accelerate the clearing of the portfolio of liquidated banks and reduce the burden on the guarantee system.
