PR worth billions: how the head of the ARMA Duma uses the Gulliver shopping center to make statements, not decisions

The tender to select a manager for the Gulliver shopping center in Kyiv, announced by the Asset Recovery and Management Agency, has prompted a new wave of criticism against the agency. Despite the loud statements of ARMA’s head Olena Duma about the “most rigorous” selection, this process may end in nothing and even cause losses to state-owned banks. The reason is simple: the mall building is pledged as collateral for mortgage loans, and Oschadbank has already threatened to foreclose on the asset if it is transferred to management, UNN writes.

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On October 30, ARMA announced a tender for a manager for one of its most high-profile assets, the Gulliver shopping center. The head of the agency, Olena Duma, spared no words to emphasize the importance of the competition, focusing on four “most stringent” criteria. Among them are the property status of the participants of at least UAH 100 million, experience in managing similar facilities and proven financial solvency.

However, there is one “gap” in this whole process. The tender documents do not mention the need to service the mall’s loans to state-owned banks.

Oschadbank’s reaction was sharp. The bank said that if Gulliver was transferred to a new manager without any obligation to repay the loans, it would initiate foreclosure in its favor. After all, Oschadbank’s losses due to the termination of loan payments could reach more than UAH 20 billion.

“We will apply for foreclosure on the facility. It’s ridiculous, they (ARMA – ed.) understood the position of state-owned banks from day one, and they act as if the position of state-owned banks does not exist. Why should we appeal to anyone? Why didn’t they take this into account? When developing the documentation, they should have taken into account the position of state-owned banks, why didn’t they? Why do we have to run after ARMA and beg for something?” – said Arsen Miliutin, Deputy Chairman of the Board of Oschadbank, responsible for NPL management.

Therefore, this competition is turning into a PR campaign for ARMA Head Olena Duma rather than a real step towards effective asset management.

“The most rigorous selection” looks impressive in statements, but the reality suggests that it is more about media noise than about solving financial problems.

ARMA once again risks becoming an example of ineffective asset management. It is likely that if ARMA does not change its approach and does not include a clause on mandatory loan servicing in the tender conditions, it could become a resounding failure.