Collateral credit has been outlawed in Ukraine, the Association of Ukrainian Banks stated. The point is that the Law on Property Assessment, with effect from September 7, bans assessing any, including collateral, property by individuals who have no special identification as an assessor. In this country, commercial banks assess collateral property as a rule by means of their own experts and methods. Now the banks will have to invite certified experts from outside.
According to the Association of Ukrainian Banks, bankers are now likely to dismiss their full- time assessors. The invitation of so-called independent certified experts is going to make borrowers pay more for their credits, Antonyna Palamarchuk, vice president of the Association of Ukrainian Banks, has come to quite an unequivocal conclusion, “In fact, all who work today with these assessors continue to issue loans and assess this collateral by themselves, but now they are doing an unlawful thing.”
The State Property Fund (SPF), which defends the interests of independent assessors in this debate, believes that the current difficulties of banks are of a temporary nature. Moreover, bank assessors often cannot guarantee reliable collateral, which the fund administration did not, of course, forget to mention. Yury Hryshan, deputy chairman of the State Property Fund, gives a very appropriate answer to the banking association’s arguments, “And what about the Ukrayina Bank? Where is its collateral? How was it assessed? Was it liquid or non-liquid property that was put up for collateral? Why was the bank unable to protect itself? Where is this protection? I wish the collateral had been assessed independently in this case.”
The new law has also created problems for Ministry of Justice facilities that employ uncertified assessors who deal with lawsuits. They are all likely to do a retraining course to get the coveted identification card. Liudmyla Holovchenko, chief of the expert examination department at the Ministry of Justice, claims that this also outlaws police and security experts who conduct examination during investigation and search operations. As far as she knows, the Security Service and the Ministry of Internal Affairs are already drawing up an appeal to President Leonid Kuchma on this issue. Yet, Mr. Hryshan is not so categorical about the Justice Ministry: he does not rule out that the situation could be settled without amending the law.
Incidentally, the SPF deputy chair also discerns a political implication in the criticism of the assessment law. “Clear rules of the game are being set. Some may not like this. A supreme juridical act confirms stable rules. Many people would not like to have this,” Mr. Hryshan says.
But, no matter how many people would not like to have this, the law has been passed. In all probability, the State Property Fund will have to urgently douse the fires breaking out, by turns, in the banking, legal or, say, agrarian sphere. For this purpose, all the interested organizations are expected to form a property assessment supervisory board shortly. In any case, the SPF has already promised to do so.
