Financial mediation – profits and new opportunities for the Bank

17.11.2015

On November 17, 2015 Kyiv Chamber of Commerce and Industry (KCCI) together with the Independent Association of Banks of Ukraine (IABU) with the support of the German-Ukrainian partnership project in the sphere of business and with the every assistance of the Ukrainian Mediation Center (UMC) organized a round table on “Practical issues of using mediation in the credit and financial sector of Ukraine”.

The leading experts in the sphere of mediation, representatives of regional mediation centers at the Chamber of Commerce and Industry of Ukraine, representatives of the banking and insurance markets, exchanges, business associations, financial, investment and financial and credit and financial companies were invited to participate in this event.

The discussion of the possibility of use of extra-judicial mechanisms for conflict resolving when dealing with bad debts in the Ukrainian credit and financial institutions, including the international experience of practical application of mediation, was based on the highly sensitive issue of financial system of Ukraine, that is: critical masses of distressed assets and the necessity to reduce the amount of troubled loans, and in the present circumstances this equals to the survival and subsequent recovery of the domestic banking system, and also the renewal of confidence and the formation of the basis for the future development of new quality banking services.

Having analyzed all information-rich and full of real life examples speeches of such speakers as: Volker Shtottsner - Head of German-Ukrainian partnership project in the sphere of business, Ronam Shpek – Head of the IABU, Oleksandr Goncharov – Head of the CCI of Ukraine on a voluntary basis, Mykola Zasulskyi – President of the KCCI, Liudmyla Sizikova – Head of the Mediation center of the KCCI, Galyna Yeryomenko – Director of the UMC, and others, one can conclude that the current difficult state of Ukrainian financial market, under the conditions of total mutual mistrust among participants and objectively poor state of the judicial branch, requires new and innovative approaches to dispute resolution, and when solving seemingly insurmountable differences of opinions between conflicting parties the mutually beneficial and correct solution can be achieved only through negotiations with the involvement of the third “peace-making” neutral party – mediator. Experience shows that agreements reached by means of mediation are usually durable, realistic and acceptable for both parties and those which are easy implemented, since the decision was made by each of the parties on a voluntary and trust-based basis.

The director of INVEST CREDIT CAPITAL Mykola Korolenko also presented a report on “Financial mediation – profits and new opportunities for the Bank”. Having many years of experience in the banking and insurance institutions, knowing their business processes and client policies, as well as having experience in banks assets management, which have been withdrawn from the market of the Financial Services by the regulator, Mykola Korolenko clearly understands that properly used mechanism of mediation in negotiations between bank and debtor can not only help to transform bed debts into the restructured loan product, but also to transform hopeless borrower into the potentially reliable client. Respect for the client who had gotten into a difficult situation, understanding of his position and possibilities of credit and financial institution makes it possible not only to return the borrowed money, but also to save money on the process of customer acquisition, to generate high-quality pool of loyal customers and to profit by cooperation with the former troubled debtor. According to the figurative statement of the Director of INVEST CREDIT CAPITAL: “These things are not hard to plumb. It is just necessary to change the perspective and to see how to transform losses into profits. The main thing is desire. Financial mediation is a new tool for conflict resolution. Our current experience allows us to claim that we know how to do it.”