15 January 2016
Cross-Border Loans: Assignment Ban Lifted, New Hurdles Imposed

Effective as of 1 January 2016, the National Bank of Ukraine (the “NBU”) adopted Resolution dated 30 December 2015 No. 996 (“Resolution 996”) introducing certain amendments to the procedure of registration of cross-border loans raised by Ukrainian borrowers.

In particular, Resolution 996 cancelled previously introduced temporary restrictions on registration by the NBU of assignments under cross-border loans.

Also, several amendments were introduced to the Regulation on Procedure for Obtaining by Residents of Loans, Advances Denominated in Foreign Currency from Non-residents and Granting by Residents of Foreign Currency Loans to Non-residents approved by the NBU’s Resolution dated 17 June 2004 No. 270, as amended. Such amendments include, among others, the following:

The NBU’s Verification

The NBU introduced a new requirement, pursuant to which certain additional documents should be collected and submitted for purposes of registration of a cross-border loan with the NBU. Such requirement will apply only in a limited number of cases, for instance:

  • one of the parties to the loan transaction is an individual-public person (or an individual closely related to a public person);
  • substitution of borrower(s) and/or lender(s), including assignment or legal succession;
  • new registration of a loan agreement following the cancellation of initial registration of such loan agreement;
  • loan granted by means of a payment to a non-resident exporter (i.e., without crediting of the funds to a bank account of Ukrainian borrower).

Upon receipt of all relevant additional documents (depending on applicable case), the NBU will examine such documents in order to identify whether the relevant transaction may lead to the conduct by relevant Ukrainian bank of risky activities, which endanger interests of the bank’s creditors (the “NBU’s Verification”). NBU is required to complete relevant NBU’s Verification within 30 calendar days after receipt of all necessary documents and issue relevant decision.

Additional Checks by Ukrainian Servicing Bank

Ukrainian banks are required to examine all documents submitted by resident borrower for the purposes of registration of a cross-border loan in order to identify whether the relevant underlying transaction may lead to the conduct by the bank of risky activities, which endanger interests of the bank’s creditors. Upon completion of such examination, the bank will issue a relevant opinion. Absence of a clear opinion will lead to rejection of the borrower’s application for registration.

New Timings

The NBU modified the timings applicable for consideration of documents submitted by a resident borrower for the purposes of registration of a cross-border loan. In particular, Ukrainian servicing bank should consider the documents submitted to it within 7 business days (used to be 4 business days). The NBU will consider the documents submitted to it for registration purposes within the period up to 7 business days (used to be 5 business days). In case of the NBU, such 7-business day period will commence only after completion of the NBU’s Verification (if applicable).

 

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