26 February 2016
National Bank of Ukraine and the Ministry of Finance of Ukraine have resolved
that RODOVID BANK JSC, which has been operating in the capacity of a remedial
bank, cease its operation. Pursuant to NBU Board Resolution No. 107, dated 25
February 2016, RODOVID BANK JSC has been declared insolvent
and transferred under the jurisdiction of the Deposit Guarantee Fund.
BANK JSC was recapitalized by the state in 2009-2011.
Since 2011, this bank has been operating in the capacity of a remedial bank.
The remedial bank was initially charged with the task
of handling public sector banks' assets and recovering public funds spent on
the bank’s recapitalization. It was estimated that it
would take the bank up to five years to fulfil this task.
However, the task was not carried
through for the following reasons. First, effective legal mechanisms
governing the transfer and the disposition of failed banks' problematic assets,
which are essential for the efficient operation of a remedial bank, have not been put in place. Second, RODOVID BANK JSC has
delivered poor performance in handling its own assets. During its operation as
a remedial bank, the operating profit made by the bank was only enough to cover
expenditures, and the state did not receive any dividends from its operation.
This being said, following the entry into force of
the Law of Ukraine On Household Deposit Guarantee
System in 2012, a special agency was established to resolve insolvent banks.
Since then, the Deposit Guarantee Fund (the Fund) has been responsible for the
disposition of failed banks' problematic assets, the reimbursement to
depositors and the
preservation of assets. Thus, the
functions performed by RODOVID BANK JSC and the Fund are overlapped.
the bank’s loss-making operation, its low efficiency in handling problematic
assets (accounting for 92% of the bank’s total assets) and its outstanding
problematic debts owed to creditors, and primarily to the NBU, RODOVID BANK JSC
would subsequently require financial support from the state.
RODOVID BANK JSC was hard hit by
the crisis, having lost liquidity and the ability to serve clients. In 2009, it
was placed under provisional administration. In 2009, the Government resolved that the
bank be recapitalized by the state through a capital injection of up to UAH 8.4
billion. Another UAH 3.95 was injected into the bank
by the state in 2011, bringing the total recapitalization amount to UAH 12.35 billion. As a result of the capital increase, the state's shareholding
in the bank stands at 99.9%.
The aforementioned measures were taken
to address the repercussions of the global financial crisis and were prompted
by the need to stabilize Ukraine’s banking system and to protect the interests
Thus, owing to the bank’s recapitalization, almost UAH 1o
billion was repaid to this bank’s individual
depositors and the depositors of Ukrprombank LLC
whose liabilities were assumed by RODOVID BANK JSC.
Since 2011, RODOVID BANK JSC has been
operating in the capacity of a remedial bank pursuant to Ordinance of the
Cabinet of Ministers of Ukraine No. 880-р of 14 September 2009, and NBU Board
Resolution No.471, dated 23 December 2011 On Approval of the Regulation on the
Rules Governing Registration, Issuance of Licenses, and Regulation of Remedial
Bank’s Activities, as well as License No. 1 of 15 June 2012 held by the
The Law of Ukraine On Household Deposit Guarantee System
(as amended in 2014-2015) passed in 2012 provided the Deposit Guarantee Fund
with a mandate to resolve insolvent banks, dispose assets of failed financial
institutions, reimburse depositors, and preserve banks’ assets and liabilities.