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Banks unlikely to acquire shares in authorized capital of enterprises with overdue debts

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October 24, 2016 12:05

Draft amendments to the decree number of 2004 have been prepared, enabling private banks to acquire shares in the authorised capital of companies, which have overdue loan payments. The share of bad debts on loans in Belarus has increased up to 14.8% of all loans granted as of September 1st, 2016. The main culprits of overdue loan payments are the economic recession and the budget cuts on state funding programmes. Bad debts are likely to continue to accumulate in banks, lawsuits by banks against bankrupt enterprises are likely to grow in number and the volume of debtor assets’ sales is likely to increase. Problem debts of large state-owned enterprises will be restructured using budget resources and will become public debt. Since the banks lack specialised professionals to manage distressed enterprises, they are unlikely to acquire capital shares, except for a few cases. Banks would rather sell collateral on problem debts.

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