For the past few months, we have been closely following tensions caused by the Russia-Ukraine crisis, as we work with lending companies in both countries. We’re now reacting to the most recent developments in this case.
Current status and upcoming measures
Currently, we don’t experience any interruptions in repayment flow from borrowers of Russian and Ukrainian lending companies on Mintos. We also reached out to the lending companies for their comments, and according to their feedback, the current situation does not affect borrowers’ repayment discipline.
As of 23 February 2022, all communication and information systems between lending companies from Russia and Ukraine and Mintos are functioning without interruptions, and information is processed on time (API, settlements, reporting on loans and repayments).
At the moment, we can’t predict how further escalation of the crisis and sanctions might affect the lending companies in these markets. We are monitoring the situation, and as a precautionary measure, we’re reviewing the impact of the market risks on the Mintos Risk Score for loans from the lending companies from Russia and Ukraine.
Based on this, we decided to remove loans from Russian and Ukrainian lending companies from the Mintos Conservative strategy. This automated investment tool selects loans for investments in the score range from 7 to 10. In case further developments require a decrease of the Mintos Risk Score for loans from Russian and Ukrainian lending companies, these loans will not be fit for the Mintos Conservative strategy anymore. We’re introducing this precautionary measure to prevent that from happening.
To summarize:
1. Loans from the following companies are removed from the Mintos Conservative strategy:
- Kviku (LLMC AirLoans) – Mintos Risk Score 7
- Mikro Kapital (JSC MFC Mikro Kapital) – Mintos Risk Score 8
- Mokka (MFC Revo Technology LLC) – Mintos Risk Score 7
2. Once removed from the Mintos Conservative strategy, investments in loans by the abovementioned companies will not be available for the standard cashout. Existing investments in these loans made with Conservative strategy will be shown as “unavailable for cashout”. Still, liquidity is possible by trade on the Mintos Secondary Market, and this solution will be in place until further action is taken, depending on the developments in these markets.
3. Loans from the mentioned and other lending companies from Russia and Ukraine will still be available for investments in:
- Custom automated strategies
- Manual strategies
- Mintos High-yield and Diversified strategies
4. Investors can buy and sell loans from Russia and Ukraine on the Mintos Secondary Market
This change is activated for the Mintos Conservative strategy from Wednesday, 23 February 2022.
How does this measure influence other Mintos investment strategies?
By default, the High-yield and Diversified strategies include all loans with a score range from 2 to 10, so potential changes and eventual decreases in the scores will not have an impact on how these strategies select loans for investments. Manual and Custom automated strategies allow investors to set up their own preferences based on their own risk appetite, and investors need to consider market and currency risks when making their investment decisions, accordingly updating investment strategies based on their preferences.
Please, be reminded that due to inherently higher sanctions risk, Mintos is not working with Russian lending companies that issue loans to businesses dealing extensively with state-owned entities. Russian lending companies that offer to invest in loans on Mintos are not state-owned. This way, we are already limiting exposure to cases that can be directly impacted by potential future sanctions.
Background case
On Monday, Russian Federation has recognized the independence of Ukraine’s Donetsk and Luhansk regions and further deepened the crisis by sending Russia-proclaimed peacekeeping troops to the area. This decision is met with a warning by western leaders, calling the decision of the Russian Federation “illegal and unacceptable”. Sanctions imposed on Russia by the EU, the USA, and others, and the anticipated state of emergency in Ukraine might have an impact on the lending companies from these countries.
We will continue monitoring developments in the Russia-Ukraine crisis, and we are ready to comply with the regulation in case the European Union or the United States impose new sanctions on Russia.
If we see any negative changes in loan portfolio performance and repayment flows, we will react to further decrease the exposure to these companies.
In the meantime, we will follow up on your comments and questions about this topic in the Mintos Community.
