Raising rate to 25% to lead over 20 Ukrainian banks to closure

Raising the discount rate by the National Bank of Ukraine (NBU) by 15 p.p. - up to 25% will lead to the closure of more than 20 banks and harm the financial stability in the country, reads the appeal of the President of the Association of Ukrainian Banks (AUB) Andriy Dubas to the head of the National Bank of Ukraine Kirill Shevchenko.

AUB urged the regulator to keep the rates on long-term refinancing loans as of June 1 for the period of martial law and three months after.

The association also proposed to postpone the deadline for providing a response to banks regarding consent or disagreement to new conditions for refinancing loans until June 10, as banks need to work out all the risks and threats in detail.

It is indicated that according to preliminary calculations, more than 50% of borrowers will stop servicing loans in the event of an increase in interest rates, while already now many customers are turning to banks with a request for restructuring, which means an automatic deterioration in the structure of banks' assets.

Consumer and business loans have a fixed interest rate that must remain unchanged, meaning huge negative interest margin losses. The situation when large retail chains are already taking loans at 30% for prepayment is no exception.

In addition, AUB urged the regulator to allow early repayment of the bank on refinancing loans at the expense of tax property through the voluntary transfer of collateral bonds by banks and adapt the standards for banks.

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