Bank Losses from an Unpaid Loan: How an Expert Counts Them

When a borrower fails to repay a loan, court claims and case files usually revolve around a single large number — and that number is routinely labelled the “loss.” In reality, the actual loss suffered by a bank almost never equals the figure produced by the creditor’s initial calculation. As a forensic economic expert, I see the gap between the “amount claimed” and the economically justified size of the harm every day — and that gap often decides the outcome of a case.

What a loan debt is made of

To calculate a loss correctly, the debt first has to be broken down into its components. Each component has its own legal basis — the terms of the loan agreement — and its own method of accrual.

Component	What it is	Condition for inclusion
Loan principal	The sum actually disbursed and not repaid	Confirmed by disbursement records (memorial orders, account statements)
Overdue interest	The charge for the use of funds up to the calculation date	Only for the actual period and at the contractual rate
Fees	Bank services provided for in the agreement	Only those expressly fixed in the agreement or tariffs
Penalty and fines	Sanctions for breach of the obligation	Strictly within the contract terms and subject to the limitation period

The key rule I always start from: only what is expressly provided for in the agreement and has actually arisen as of the valuation date belongs in the calculation. Anything accrued “for the future” or outside the contract is not a loss. I pay separate attention to sanctions: claims for recovery of a penalty (peni, fines) are subject to a special limitation period, so part of the amounts claimed may have been accrued beyond the period that can be taken into account at all.

Why collateral reduces the real loss

A second element frequently missing from initial calculations is collateral. Where the obligation is secured by a pledge (zastava), a mortgage (ipoteka) or a surety (poruka), the bank’s real losses are reduced by the amount the creditor received, or could objectively have received, from realising that security.

• Pledge and mortgage. If the pledged asset has been sold, the proceeds cover part of the debt — and the loss is reduced by exactly that part. If no sale has yet taken place, the expert takes the collateral value into account based on the available valuation documents.
• Surety. Funds recovered from, or voluntarily paid by, a surety also reduce the uncovered part of the debt.
• Partial repayments. Any payments received after the default arose must be accounted for in the correct order of repayment.

Ignoring the value of realised collateral is one of the most common reasons a claimed “loss” turns out to be overstated.

Documents without which the calculation is impossible

An expert opinion is not built “on someone’s word.” Verifying the amount requires the primary and accounting records:

1. The loan agreement with all annexes and amendments (rates, fees, sanctions, order of repayment).
2. The repayment schedule — planned dates and amounts.
3. Memorial orders and other records of the actual disbursement of funds.
4. Account statements of the borrower — the movement of funds, dates and amounts of payments.
5. The bank’s own debt calculation — this is precisely what is checked for correctness.
6. Documents on the collateral and its realisation (pledge, mortgage and surety agreements, valuation reports, sale data).

If a document is missing, I record this in the opinion as a limitation: the expert answers only for what can be verified from the materials provided.

How I verify the amount: correctness and “double-counting”

Recalculating interest

Interest is recalculated on the actual outstanding principal, at the rate and by the method set out in the agreement, and only for the real period during which the funds were used. The typical discrepancies I find are:

• interest charged on a part of the principal that has already been repaid;
• application of a rate higher than the contractual one, or one changed without proper grounds;
• accrual for a period after the date on which the harm is determined.

Detecting double-counting

“Double-counting” occurs when the same amount enters the calculation twice under different names — for example, when a penalty and a fine are charged for the same breach in a way that effectively duplicates each other, or when overdue interest sits both inside the principal and as a separate line. The expert’s task is to reduce all the components to a single, coherent logic and to show that not a single hryvnia has been counted twice.

Reserves for active operations are not losses

The role of reserves deserves a separate note. Under the Regulation on how banks of Ukraine determine the amount of credit risk on active banking operations (approved by the Resolution of the Board of the National Bank of Ukraine, NBU, No. 351), a bank is obliged to form reserves against such operations. But a formed reserve is an accounting estimate of expected losses, not a proven amount of harm. In criminal proceedings — including under Articles 190, 191 or 218-1 of the Criminal Code of Ukraine (KK) — the amount of harm is established not by the size of the reserve but by actual, documented losses. The two categories must not be confused: a reserve may be formed for the full amount, whereas the real loss, after accounting for collateral and repayments, is substantially smaller.

Typical mistakes by the claimant and the investigation

Years of practice reveal the same recurring distortions that artificially inflate a “loss”:

• Future interest. Interest that would have accrued to the end of the agreement is included in the loss, even though the use of the funds has already ceased. Future forgone income is a separate civil-law category (lost profit, upushchena vyhoda), not actual real damage; the two must not be mixed when determining the amount of harm in criminal proceedings.
• Double sanctions. A penalty and a fine are applied simultaneously so that they overlap, or sanctions are charged beyond the limits allowed by the contract and the law.
• Forgotten collateral. The calculation omits funds from realised pledges or paid by a surety.
• Wrong order of repayment. Payments are applied first to sanctions rather than to principal and interest as the agreement provides — so the debt “never melts.”
• A calculation with no anchor date. The amount is taken “as of today,” even though harm must be determined as of a specific date.

Each of these errors on its own can change the legal classification of the act, because whether an offence exists — and how serious it is — depends on the size of the harm.

To generalise from practice: in one case the loss was claimed as the entire sum disbursed together with interest to the end of the term. On analysis it turned out that part of the debt had already been repaid from a realised mortgage, part of the interest had been accrued “for the future,” and the penalty and fine partly duplicated each other. The real, documented loss proved noticeably smaller — and that directly affected the classification.

The date on which the amount of harm is determined

This looks like a technicality, but it is fundamental. The size of the loss is a value tied to a specific moment: the date payments stopped, the date the demand was made, or the date set by the investigator or the court in the questions put to the expert. The same loan, on two different dates, yields two different amounts, because accrued interest, the recognised repayments and the state of the collateral all change.

That is why my opinions always state clearly as of which date the calculation was made, and why. Without this, the figure loses its evidentiary value.

What to do before the expert examination

Practical steps that save the parties time and money:

1. Assemble the full set of documents — the agreement with annexes, the schedule, memorial orders, statements, the bank’s calculation, and the collateral documents.
2. Frame precise questions for the expert — in particular on the correctness of accrual, the presence of double-counting, and the size of the loss net of collateral as of a specific date.
3. Check the arithmetic and the grounds before filing — overstatement is often visible at the very stage of comparing the calculation against the contract.
4. Separate the categories — principal, interest, sanctions, forgone income and the reserve should be shown separately, not as a single figure.

An expert examination is ordered under the rules of the relevant procedural law — the Criminal Procedure Code (KPK), the Commercial Procedure Code, the Civil Procedure Code or the Code of Administrative Judicial Procedure, depending on the type of proceedings — while the procedure itself is governed by the Law of Ukraine “On Forensic Expert Examination” and the Instruction on the ordering and conduct of forensic examinations, approved by an order of the Ministry of Justice (No. 53/5). Such proceedings are often built on materials from the Bureau of Economic Security (BEB) and, where there are signs of money laundering or tax offences, in cooperation with the State Financial Monitoring Service (Derzhfinmonitoring) and the State Tax Service. Regardless of who initiates it — an investigator, a party to a commercial dispute or defence counsel — a correct calculation follows the same logic.

If you are preparing a claim, checking a debt amount that has been asserted against you, or defending in proceedings where a “bank loss” figures, it is worth having that figure independently verified by a specialist. I would be glad to help make sense of the debt calculation and to prepare a well-founded expert opinion within the framework of the applicable law.