Banking Law

Faith in Aid from Abroad

Problems of appropriate financing for Ukrainian companies may be solved by raising loan funding from abroad. However, this option needs prior registration. The official statistics of the National Bank of Ukraine (NBU) prove an increase of attractiveness of the loans from abroad as financing source. In 2012, Ukrainian companies (except for banks, state owned entities and monetary regulatory authorities) received totally USD 16 million of long-term loans from foreign lenders in comparison with USD 8.7 million, USD 11.6 million and USD 13.2 million of long-term loans received in 2009, 2010, and 2011 respectively. The result of 2012 is even higher than the outcome of the pre-crisis 2008 with USD 14.3 million.

The basic regulation for the registration of the loans from abroad is the “Guidance on Procedure for Receiving Loans in Foreign Currency by Residents from Non-Residents and Issuing Loans in Foreign Currency by Residents to Non-Residents” adopted by the National Bank of Ukraine resolution No. 270 of 17 June 2004.

What is registered? The loan contracts with the foreign lenders where the loan is denominated in a foreign currency are subject to the NBU’s registration. Thus, the registration is necessary when all following conditions are met: (1) a borrower is a resident of Ukraine; (2) a lender is a non-resident of Ukraine; (3) the received funds are denominated in a foreign currency; and (4) there is a loan contract.

Trade credit contracts, state loan contracts or loan contracts secured by state guarantees do not need the NBU’s registration.