IuteCredit will dispute the revocation of license in Kosovo

Published on: 09 Dec 2019

International microcredit and fintech company IuteCredit Europe is going to challenge the unexpected and unjustified decision of the Central Bank of Kosovo to revoke its license. 

IuteCredit confirms that its group performance will not be affected by license revocation, as Kosovo’s branch forms a small part of the company’s portfolio.

According to the CEO of IuteCredit Europe, Tarmo Sild, the revocation of the license was unexpected for the company, but its financial impact on the IuteCredit group is minimal. “We entered Kosovo’s market only two years ago and in essence, are still operating there as a startup company, which is only now starting to reach its goals. We submitted new business plans to the local authorities and were waiting for feedback to those plans,” Sild described.

Currently, the company is working both with legal advisors and local authorities, in order to ensure the continuation of business in Kosovo as soon as possible and minimize the negative impact of the situation both to the company and the investors. “Today our branch in Kosovo forms 12.4%, i.e. 9.3 million euros of our group’s loan portfolio. Therefore, we do not see that the situation would have a strong impact on our group. The still ongoing collection of receivables from customers continues to contribute to our revenues supported by a very good repayment behavior of customers in Kosovo,” Sild added.

According to the CBK, the reason for the revocation of the license is that ICKO has not ensured the application of the effective interest rate communicated in the business plan at the time of submission in 2017. “This is a fictional cause. In countries with effective markets, a business plan is a document that belongs to the company and its goal is to help to achieve the company’s goal. The concept of “business plan” implies to a specific plan. The company also has the right to make changes in this plan, if it is necessary to fulfill its goals. However, there is no maximum interest rate cap set by Kosovo’s legislation,” Sild emphasized.

This year, IuteCredit has provided loans at APRC of 59%. As a comparison – Estonia has  a maximum APR of 58%. “In simple terms, the monthly repayment of a fridge for 500 euros for 12 months is 56.4 euros. Therefore, it is nothing extraordinary,” Sild added.

According to Tarmo Sild, it is regrettable that the lack of legislation on effective interest rates and the respective caps makes the offering of loan products more complicated in a developing economy. “Meanwhile, our current portfolio, operations process in loan collection, and our team in Kosovo are outstanding. Therefore, today we can confirm to our investors that we will still meet our goals for 2019.”

In order to protect the company, in particular, the employees, business partners, and investors of IuteCredit, the company is cooperating with international law firms and also continues to cooperate fully with the regulatory authorities in Kosovo. The company will disclose information as soon as new findings become available via its website www.iutecredit.com.

IuteCredit is an Estonian-origin international microcredit and fintech company focusing mostly on installment loans, including car loans. The average loan period is one year. Today, IuteCredit has become a leading microcredit company in Europe with a balance sheet of 100 million euros and more than 200,000 active customers.

Company operates in Moldova, Albania, North Macedonia, Kosovo, and Bosnia & Herzegovina. The portfolio of business partners of IuteCredit includes state postal services,  international teleoperators Orange, VodaFone, Deutsche Telekom, large electronics stores, etc.