07 March 2022
Russia-Ukraine War| PeerBerry's actions in response to the war impact

Current events in Ukraine have redrawn the geopolitical map and shaken our perception of what a few weeks ago seemed unrealistic. Unfortunately, Russia’s war on Ukraine is going 12th day, and our business partners in Ukraine – 9 well-established and profitable companies – are at the epicenter of the war. Sadly, there is nothing we can do to stop it. Just hope it will end soon.

Last week we put all our efforts into helping our partners’ families relocate to other countries, and most of them are safe now. Together with our partners in other countries, we joined many humanitarian aid initiatives to support the Ukrainian people.

War impact on the supply of loans

On February 24th, when Russia invaded Ukraine, PeerBerry immediately stopped operations with both markets. Loans from Ukraine and Russia accounted for 1/3 of all loans on the PeerBerry platform. The disconnection of these two markets results in a corresponding reduction in the supply of loans on the platform. To balance overall supply on the platform, PeerBerry will seek to provide investors with a sufficient supply of loans from other profitable markets, prioritizing quality and safety over quantity.

The need for temporary restructuring of repayments of loans

The current force majeure situation requires us to take responsibly measured actions to protect our investors’ interests while our partners must keep the sustainability of their business.

Currently, we may see a larger share of late loans in our portfolios. It is because two markets (Ukraine and Russia) are not performing, thus increasing the overall share of late loans. Also, our partners are not pushing repayments in large volumes regardless of the country due to the lower supply of loans – to ensure the continuity for our investors to earn profits, as late loans generate the same interest rates as current loans. We want to remind you that under the agreements, the loan can be delayed for up to 60 days. Interest rates are being calculated for each day of the delay. When repaying loans, those loans that are late for more days will be prioritized (i.e., will be repaid first).

Loan repayments from countries that are not affected by the war will soon return to normal.

Business partners in other countries operate as usual

While Ukraine is fighting for its survival, lenders in other countries are developing as usual. We maintain daily contact with our partners in other countries. Currently, we do not see any impact on our partners’ business in other markets. To keep business sustainable, now our partners focus only on those countries where companies have a proven track record and operate profitably.

War impact on Ukrainian loans

6 Aventus Group companies (Credit Plus UA, Credit 7 UA, Slon Credit UA, Auto Money UA, Selfie Credit UA, Aventus Development) and 3 Gofingo Group companies (Euro Groshi UA, Gofingo UA, Zecredit UA) are affected by war in Ukraine.

Ukraine has been one of the most developed, one of largest, and one of the most profitable markets for our partners. Russian war in Ukraine makes huge damage to the country, its people, and business. Full damage for our partners’ business is not calculated yet, but it is clear – it is enormous in terms of the size of the lost portfolio, including profits.

The war in Ukraine is going on, but not the whole country is affected yet. Our partners see that even some loan repayments are being transferred to lenders’ accounts. If the war in Ukraine ends soon and the local banks start making international transfers, our partners in Ukraine will immediately transfer funds to our investors, thus reducing their obligations more quickly.

Currently, Ukrainian loans in PeerBerry’s portfolio amounted to EUR 22.2 million. Currently, partial repayments of Ukrainian loans to investors are made from the group’s reserves.

War impact on Russian loans

While Ukraine is fighting for its survival, companies in Russia are continuing operations. Borrowers’ repayment discipline in Russia remains stable, but a growing number of sanctions for Russia leads to a significant local currency (RUB) depreciation and an impending economic downturn. For PeerBerry business partners in Russia, it means a significant drop in business value as the value of the loan portfolio correlates directly with the local exchange rate.

Our partners in Russia are conducting a plan on how to cover their obligations to investors.

Russian loans in PeerBerry’s portfolio currently amount to EUR 19,96 million. Partial repayments of Russian loans to investors are currently being made from the group’s reserves.

Since suspending operations with Russian and Ukrainian companies (within the last 12 days), PeerBerry partners have repaid EUR 8.5 million of war-affected loans from the group reserves.

The ultimate goal – no losses to PeerBerry investors

The war is a force majeure subject under agreements with our business partners. However, despite the great damage to business in Ukraine and Russia, our partners will take all possible steps and measures to repay all investments into Ukrainian and Russian loans within a possible realistic timeframe.

Cash reserves accumulated by our partners’ companies are already being used to repay investments into war-affected loans gradually.

What does a cash reserve mean, and how is it accumulated?

PeerBerry business partners always kept a cash reserve of about 10%+ of their portfolio on PeerBerry. No business in normal circumstances would keep more on accounts because money generates value only when money is ‘working’. Our partners always reinvest their profits back into their business development.

Group cash reserves are being accumulated from the profits of profitable companies. According to accounting standards, the profits can’t be withdrawn from the company’s account more often than once per month. It explains why a certain time is required to accumulate a cash reserve, to cover larger obligations, like in the current case with war-affected companies. While accumulating cash reserves, the need to protect the efficiency of profitable business is taken as a priority.

While cooperating with PeerBerry, each company strictly covers its obligations (Poland companies cover Polish loans, a company in Vietnam covers Vietnamese loans, etc.). Cash reserves are being used only in the frame of the group guarantee when the company/companies face operational difficulties and can’t cover their obligations.

Even though the war is outside the scope of the group guarantee agreement, our partners are using their reserves to reduce their liabilities in the countries affected by the war and will continue to make every effort to repay all investments into war-affected loans.

Assessing the scale of the war damage to our partners’ business, we must be very honest with you and very realistic about realistic timeframe possibilities to repay all war-affected loans. It may require more time than 60 days, but the exact timeframe is not clear yet. Our partners are currently assessing all possible opportunities.

PeerBerry will not charge a commission fee from the war-affected part of the loan portfolio

PeerBerry’s only income is a commission received from business partners. Given the complexity of the situation to support business partners in this difficult situation, PeerBerry will not charge a commission for the entire current war-affected loan portfolio.

We will keep sharing with you all relevant information from our business partners, and we will put all our efforts into protecting your interests in the best way we can do in this extraordinary situation.