State budget to pay for banks troubled assets

According to the National Bank, as of May 1^st, 2017, problem assets in the banking system totalled USD 2.9 billion, or 14.2% of the total assets subject to credit risk. The critical threshold for problem assets is 15-20%, which could lead to problems with customer service in the banking system. The increase in distressed assets was due to a significant number of unprofitable enterprises in the economy, which were unable to service their debts and generated new losses. Troubled debts of agriculture would be restructured by transferring distressed assets to the Asset Management Agency. New regulations could be adopted in order to change the risk group for some assets, interest rates on loans could be reduced to lower the debt burden on enterprises, banks could boost sales of collateral in order to repay troubled debts. In late 2016, the state was buying out bad debts and transferring them to the Asset Management Agency to reduce the share of problem assets in banks. In 2017, such practice could be used in other sectors of the economy, the final payer for all debts would be the state budget.