An extended meeting of the Administrative Board of the Deposit Guarantee Fund (hereinafter – the Fund) was held at the National Bank of Ukraine, featuring Ukraine’s Prime Minister Arseniy Yatsenyuk, President's representative in the Cabinet of Ministers Oleksandr Danilyuk, Governor of the National Bank of Ukraine Valeria Gontareva, Ukraine's Finance Minister Natalie Jaresko, Chairman of the Fund’s Administrative Board, First Deputy Governor of the National Bank of Ukraine Oleksandr Pysaruk, Managing Director of the Deposit Guarantee Fund Kostyantyn Vorushylin, MP and Advisor to Ukraine’s Prime Minister Svitlana Voytsekhivska.

The meeting was also attended by Ukraine’s Prime Ministers Roman Kachur, Oksana Makarova and Artem Shevalev, First Deputy Minister of the Cabinet of Ministers Oleh Parakuda, Director of the NBU Banking Supervision Department Kateryna Rozhkova, Head of the Secretariat of the Parliamentary Committee on Finance and Banking, Deputy Managing Directors of the Deposit Guarantee Fund Andrii Olenchyk and Andrii Kyiak, Director of the Financial Policy Department of the Secretariat of the Cabinet of Ministers of Ukraine Valentyna Yashchuk.

The fiscal and law enforcement authorities were represented at the meeting by Head of the State Financial Monitoring Service of Ukraine Ihor Cherkaskyi, Deputy Prosecutor General of Ukraine Oleh Zalisko, First Deputy Head of the State Fiscal Service of Ukraine Serhii Bilan, First Deputy Chairman of the State Financial Inspection of Ukraine Oleksandr Shkuropat, Head of the Main Directorate for National Economy Counterintelligence Protection of the SBU Serhii Semochko, Head of the Department for Counteraction to Economic Crimes of the MIA of Ukraine Ihor Kupranets.

The meeting addressed issues related to DGF institutional capacity building, the interaction between the Fund, the National Bank of Ukraine and law enforcement agencies to bring to justice persons charged with embezzlement of funds from insolvent banks, as well as to coordination of efforts to recover the banks’ assets illegally taken out of the country.

”The Fund as it is today was established in 2012.  Unfortunately, back then, nobody planned a clean-up of the banking system and the Fund was unprepared to deal with such irregularities that had been caused by banks' failures.  It was not intended to handle the resolution of so many failed banks.  This is confirmed by conclusions drawn by experts from the World Bank and the U.S. Department of the Treasury, which have been working in close collaboration with the Fund over the past year,” said Oleksandr Pysaruk at the beginning of a meeting, highlighting the challenges currently faced by the Fund.

In his turn, Managing Director of the Deposit Guarantee Fund Kostyantyn Vorushylin underlined that in 1998–2013 34 banks were withdrawn from the market, whereas in the past two years as many as 68 financial institutions have been put into resolution. 

“Consequently, the Fund’s payments of the guaranteed compensation to depositors have increased substantially.  Over the past 15 years, UAH 5.8 billion has been paid out to depositors of insolvent banks, whereas in 2014-2015 the DGF has paid out more than UAH 54 billion,” said the Managing Director of the Fund.

A total of UAH 45.1 billion in loans was disbursed to the Fund by the government to finance such payments, which enabled the timely payout of compensation to the depositors of insolvent banks. In addition, the Fund is engaged in vigorous efforts to ensure the most efficient management of the assets of insolvent banks. It should be noted that the book value of these assets amounts to over UAH 382 billion, with their estimated value totaling UAH 93.72 billion.

According to Kostyantyn Vorushylin, a series of changes to the legislation has been passed to address these challenges. In addition, efforts are underway to streamline the Fund’s structure.

The Fund’s restructuring process provides for the establishment of the Investigation and Anti-Corruption Department and the Internal Audit Service, as well as the consolidation (merging) of the financial and operational functions of the Fund and insolvent banks within the Fund.

Efforts are underway to establish the Department of Consolidated Sales and Asset Management, which would make it possible to centralize the decision-making process in this area solely at the Fund. The designated representatives appointed to insolvent banks currently enjoy a wide degree of autonomy in decision-making.

Among other things, the meeting participants discussed the   establishment of a Joint Group made up of law enforcement agencies representatives for the efficient investigation of proceedings in the banking sector. This Group will handle the cases of bank managers and owners who are suspected of driving banks into bankruptcy.

Governor of the National Bank of Ukraine Valeria Gontareva pointed out that “all transactions are fully documented, and what is needed is to launch an investigation. All the documents confirming the funneling of assets and a split of deposits have been collected.  We have come to an understanding with the General Prosecutor’s Office over these issues and look forward to constructive cooperation in this area”.

Kostyantyn Vorushylin noted that a total of 2,149 claims worth UAH 132.7 billion had been lodged with the Fund, of which 250 claims amounting to UAH 99.86 billion had been filed against bank owners and managers.

Following the meeting of the Administrative Board of the Deposit Guarantee Fund, a further action plan containing measures to enhance the operational efficiency of the Fund and to bring to justice the persons responsible for driving banks into insolvency was agreed upon..