On 23 March 2017, the National Bank of Ukraine (the NBU), by its Board Resolution No. 261 (the Resolution), simplified the procedure for registering cross-border foreign currency loans attracted by Ukrainian borrowers. Unlike previously, the new procedure expressly allows foreign lenders to initiate loan registration of the change of a lender under a cross-border loan (the Registration) without cooperation from a Ukrainian borrower.
Historically, only borrowers could initiate the Registration. As a result, lenders were always dependent on the cooperation of their borrowers in order to obtain a proper Registration of a cross-border loan assignment. This made it difficult for a lender to transfer its rights under a cross-border loan to a new lender, particularly in the case of a non-performing loan.
Pursuant to the Resolution:
- a Ukrainian bank creditor can apply to the NBU for the Registration on its own behalf, in case it assigns to a non-resident creditor its rights under a foreign currency loan extended to a Ukrainian borrower but continues to act as a servicing bank of the borrower in respect of that loan;
- a Ukrainian lender can initiate the Registration jointly with its relevant non-resident assignee in case it assigns to that non-resident its rights under a foreign currency loan extended to a Ukrainian borrower and ceases to act as a servicing bank of the borrower in respect of that loan;
- an assigning non-resident creditor can initiate the Registration jointly with the relevant new non-resident creditor in case it assigns to such creditor its rights under a cross-border loan that is registered with the NBU at the time of the assignment,
provided that, in each case, the borrower has been notified of such assignment.
We expect that these long-awaited developments will simplify trading in loans (including non-performing loans) extended to Ukrainian borrowers and pave the way for attracting new financing from abroad.
The changes introduced by the Resolution will become effective on 10 April 2017.
1NBU Board Resolution No. 26 "On Amending Certain Regulatory Acts of the National bank of Ukraine" dated 23 March 2017 and effective from 24 March 2017, except for certain changes which will be effective from 10 April 2017.