MANAGEMENT OF NON-PERFORMING LOANS OF BANKS: INTERNATIONAL EXPERIENCE

Abstract

Under the pressure of recent events and challenges – the war in Ukraine, multiple military conflicts in the world, increased geopolitical turbulence, the actualization of industrial policy by states, the socio-economic consequences of the COVID-19 pandemic, rising climate risks, and the need to accelerate the transition of countries to sustainable development – the modern world is plunged into deep transformation processes. In turn, the intensity and accumulation of these processes has significantly affected the quality of assets of banking institutions around the world, and especially the level of non-performing loans. The COVID-19 pandemic has led to a significant decline in business activity of economic agents and affected the solvency of the population. Supply chain disruptions caused an imbalance in financial flows, leading to financial difficulties and/or bankruptcy of business entities. These circumstances have been the determining factors in the sharp increase in NPLs in recent years in many countries. However, the problem of NPLs management in the context of the war in Ukraine is becoming critically acute, mainly due to the fact that banks have non-performing assets of Russian origin and the lack of modern global experience in handling such assets. The purpose of the study is to highlight foreign and domestic experience in addressing the high level of non-performing loans of banks, and also to assess the possibilities of implementing effective foreign experience in resolving NPLs in the current realities of Ukraine. The economic essence, consequences and ways of NPLs settlement are revealed. The experience of Korea in resolving the high level of NPLs due to the realization of a multitude of financial and economic risks with the onset of the financial crisis of 1997 is analyzed. The peculiarities of the European Union's experience in overcoming the sharp increase in the share of NPLs after the financial and economic crisis of 2013-2014 are highlighted. The nature of formation and dynamics of NPLs in the banking system of Ukraine is revealed, including the impact of the war on this process is analyzed. The article highlights the efforts of the National bank of Ukraine and banks in Ukraine aimed at overcoming the high level of NPLs in 2017-2021. The impact of a full-scale war in Ukraine on the level of NPLs in 2022-2023 is characterized. The possibilities of adopting and implementing the best foreign experience in resolving the high level of NPLs in view of the current realities of Ukraine are assessed.