The National Bank approved changes to a number of regulations on the definition of non-performing assets. This was reported by the regulator's press service.
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Non-performing assets
For this purpose, the term “non-performing assets” was introduced in the Regulations on the organization of the process of managing problem assets in Ukrainian banks.
In the future, the bank’s non-performing assets, except for those for which a default indicator has been established, will include:
acquired or created impaired financial assets;
restructured assets for which after termination they were recognized as non-performing, the bank carried out repeated restructuring and/or for which there is a delay in debt repayment of more than 30 calendar days.
Accordingly, in the Regulations on the determination by Ukrainian banks of the amount of credit risk for active banking operations, the term “non-performing assets” is replaced by the term “defaulted assets”. That is, the definition of default will comply with the provisions of Regulation E C No. 575/2013.
The changes also define the conditions for terminating the recognition of assets as non-performing and defaulting. Special attention is paid to restructured assets, taking into account the increased risks of such assets and the approach in European legislation.
To terminate the recognition of a restructured asset as non-performing, the following conditions must be met:
- At least 365 years have passed from the date of debt restructuring calendar days; none of the debtor’s obligations are overdue by more than 30 calendar days; the bank formed a judgment about the possibility of the debtor fulfilling its obligations, which is confirmed by its payment of the amount of debt that was overdue or written off by the bank in accordance with the terms of debt restructuring.
The changes will come into force on January 1, 2025, therefore, banks have enough time to prepare internal bank documents.
