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EcoFinance, a lending company from Russia which had short-term and personal loans for investments on Mintos, is reporting deterioration in its daily operations as the first sign of the impact of sanctions for Russia and the country’s response to the sanctions.
Leonid Dulenkov, director of Ecofinance, said that the “unprecedented stress test from all fronts” comes from the exchange rate deterioration and legislative restrictions, which are further impacting portfolio quality and the company’s liquidity.
Ecofinance shared that their action to preserve their operations was prompt right after 24 February 2022. “We quickly decreased our daily issuing volumes up to 40% and lowered risk by limiting the onboarding of new customers by more than 2/3. We boosted our collection efforts, introduced more settlement and restructuring options. We also actively approached any withdrawal request from the local Russian investors in roubles. As a result, the current portfolio is down by 7%, early delinquency is up by 21%, and funding costs increased approximately by half,” said Leonid Dulenkov.
Ecofinance further shares that while on the operational and team level all processes are functioning as usual, the sanctions and Russia’s internal response to them are having a wide impact. “We face severe restrictions to the free flow of capital, impact on our ability to do any payments in foreign currency, and on the ability to pay creditors from the Western markets. We are concerned the portfolio may further deteriorate due to massive closures of foreign companies and stalling of the local business due to disruption in supply chains. Hence, there is an expected significant drop in GDP and shock in employment,” said Dulenkov. As a result, the company’s solvency might be affected in the upcoming months, and he further addressed the impact for the Mintos investors. “Due to the nature and origin of our obligations towards Mintos and its investors, if the current exchange rate would be applied, we would be below the minimum capital requirement, and we face risk on the seizure of assets at any moment.”
“In Ecofinance, we are doing our best and will do what it takes and beyond to keep the company afloat. We are looking, together with Mintos, for the possible options to meet the minimum capital requirement to make any settlements in the upcoming period,” adds Dulenkov.
In the meantime, at Mintos we’re well aware of the uncertainty the Russian businesses face in the current economic environment, as we stay in contact with all lending companies from Russia on a daily basis. In our regular communication, we observe a strong willingness of these companies to keep their businesses going and meet their obligations towards investors, while their ability to do so is influenced by severe external factors.
We will keep you informed about any new developments related to this lending company.
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