Will ARMA protect the interests of Oschadbank? Competition for Gulliver’s manager calls into question the agency’s financial responsibility

The Asset Recovery and Management Agency (ARMA), when announcing a tender to select a receiver for the Gulliver BFC in Kyiv, did not take into account loan obligations to state-owned banks, including Oschadbank, jeopardizing the financial interests of the state. Experts suggest that this step may indicate corrupt motives and an attempt to satisfy the interests of the future manager, even at the cost of potential losses for state-owned banks, UNN writes.

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ARMA has announced a competition to select a manager for the Gulliver shopping and entertainment center. The head of the agency, Olena Duma, proudly stated that she had taken the strictest possible approach to the selection of the manager of this high-profile asset and even set the maximum possible 4 criteria for candidates. Among the conditions to be fulfilled by the bidders are property worth at least UAH 100 million, a professional team, proven experience in managing similar facilities, and proven financial solvency.

The building of the Gulliver shopping center is pledged as collateral for a mortgage loan from state-owned banks, including Oschadbank. However, among the criteria set out by the ARMA, there is no mention of the need to repay the loan.

Economist Andriy Novak in a commentary for UNN emphasizedthat the lack of consideration of the interests of the state-owned bank casts doubt on the objectivity of the tender. In his opinion, this approach creates conditions for potential corruption, as the “pre-arranged manager” may benefit.

“The interests of Oschadbank, which lent money to the Gulliver shopping center, should have been taken into account. The fact that they are not taken into account already suggests deliberate corrupt actions in the interests of the new future manager, which has probably already been agreed upon, and this will cause direct losses to the state bank as well. If this happens, in addition to direct losses, it will also set a very negative example for similar situations, an example that ARMA can make decisions that will cause damage to the state or the owner,” the economist said.

In his opinion, the ARMA should primarily protect creditors, including Oschadbank, but for some reason the agency is doing the exact opposite, causing it losses.

Oschadbank is adamant about appointing a new manager for Gulliver, who will not service the loan.

“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? We will foreclose on the facility, that’s all,” Arsen Miliutin, Deputy Chairman of the Board of Oschadbank responsible for NPL, said in a commentary to UNN.

The state-owned bank frankly does not understand why, instead of paying off the loan, Gulliver’s earnings will be given to an “obscure manager.

Economic expert Oleksandr Okhrimenko suggeststhat ARMA deliberately did not include loan obligations in the requirements for the manager.

“On the one hand, there is indeed a problem that Oschadbank may lose this mortgage loan, meaning that no one will repay it. On the other hand, it is unrealistic to find a manager who will agree to take over the Gulliver shopping center with such debts. ARMA… simply understands that if we take into account Oschadbank’s debts, the agency will not be able to give this Gulliver to anyone at all,” he said.

ARMA’s actions in announcing a tender for a receiver for Gulliver BFC without taking into account loan obligations are worrisome. After all, ignoring the interests of state-owned financial institutions creates a risk of losses for the state and may affect the situation in the banking system. This decision of the ARMA calls into question the agency’s ability to effectively manage assets without harming the public interest.

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As you know, the mall building is pledged as collateral for a mortgage loan from Oschadbank and Ukreximbank. The owner of Gulliver is TRI O, and it is currently paying off the debt to the banks. If the asset is transferred to a new manager, the company will lose its only source of income and will not be able to repay the loan, and the state bank will be left without payments on its debt obligation.

Even before the ARMA announced the tender , Oschadbank emphasizedthat when Gulliver is transferred to a new manager, all loan payments will stop and the loan will remain outstanding, which is detrimental to the interests of the state-owned bank.

Oschadbank’s losses due to the suspension of loan payments could reach more than UAH 20 billion.