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The Supreme Court of Ukraine Overturns the Lower Courts' Rulings in Respect of the Two Banks Put into Resolution

17 August 2017

Press Release

 

In August 2017, the Supreme Court of Ukraine, within its competence, overturned the lower courts' rulings in respect of the liquidation of Bank Premium.

 

The Supreme Court of Ukraine established that the circumstances had not been thoroughly delved into and therefore sent the case back to a lower court for retrial.

 

This has been the second case in respect of the bank that has been put into resolution that has been sent for retrial by the Supreme Court of Ukraine in the past month.  In July 2017, the Supreme Court of Ukraine overturned the lower courts' rulings in respect of the liquidation of Bank Union. This case has also been seen for further review.

 

The National Bank of Ukraine welcomes a comprehensive and through review of the case files regarding the banks that have been put into resolution as the banking system’s operation and the financial stability hinge on court rulings.

 

A total of 21 similar cases are currently under litigation at courts of first instance.

 

As of 15 August 2017, court rulings issued by the courts regarding 11 banks  had entered into force.  These rulings allowed banks to resume their operation and overturned NBU decisions ordering  to place failed banks into resolution. These banks included the following: Financial Initiative, Union, Ukraine Innovation Bank, Capital, Bank Veles, Radical Bank, TK Credit, EAST-INDUSTRIAL COMMERCIAL Bank, Bank KYIVSKA RUS, KSG BANK, and Khreschatyk Bank.

 

The NBU has repeatedly emphasized that  rulings issued by courts allowing the banks that have been resolved to resume operation could pose systemic risks to the financial stability.  These rulings undermine the NBU efforts aimed at restoring the health of the domestic banking system.

 

The NBU expects a swift implementation of the judicial reform, which would make the judicial system more efficient.

 

The procedure for establishing a legal entity, which intends to engage in banking business, the regulation of banking operations and bank liquidation are provided for by laws and other regulations of Ukraine. However, the legislation does not provide for a mechanism allowing the  bank in respect of which the decision ordering the revocation of the banking license and liquidation was passed to resume its operation, including upon the court's ruling, regarding which the decision on revocation of the banking license and liquidation was passed.

 

 

 

 

 

 

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Last modification   17.08.2017