On 15 November 2016, the Board of the National Bank of Ukraine issued Decision 416-рш/БТ on declaring ARTEM-BANK JSC Public Joint-Stock Company insolvent in accordance with Article 76 of the Law of Ukraine On Banks and Banking.
The Bank’s loan portfolio amounted to UAH 385 million. ARTEM-BANK JSC encountered problems with loan servicing (nonperforming loans accounted for 80% of its loan portfolio) which resulted in the loss of the bank's liquidity, a development observed since early November 2016. As a result, the Bank has failed to meet its obligations to customers. In particular, the NBU established that the Bank has failed, for five working days running, to fulfill 2% or more of its liabilities before depositors and other creditors. As of 8 November 2016, ARTEM-BANK JSC’s total amount of outstanding transactions that the Bank has failed to execute exceeded UAH 20.2 million (5.3% of the Bank’s liabilities).
In addition, as of 1 October 2016, as a result of additional provisioning, the bank's equity turned negative (as of 25 October 2016– “minus” UAH 185.2 million). In turn, this has resulted in the Bank’s failure to comply with prudential ratios and the limits of open foreign exchange position.
The recapitalization program designed by ARTEM-BANK JSC lacked information confirming the credibility of the measures proposed by the bank and its ability to meet the deadlines. In particular, the shareholders of this Bank have failed to provide letters of commitment to inject additional capital into the bank.
Pursuant to paragraph 3 of part 1 of Article 76 of the Law of Ukraine On Banks and Banking, the NBU is obligated to declare a bank insolvent if the bank has failed, for five working days running, to fulfill 2% or more of its liabilities before depositors and other creditors.
According to information available to the NBU, 94% (2, 411 individuals) of all the depositors of ARTEM-BANK JSC will be reimbursed in full, as amounts held in their deposit accounts fall within the insured deposit amount of UAH 200 thousand, which is covered by the Deposit Guarantee Fund. Customers with larger deposits (above the insured deposit amount) will be reimbursed up to the compensation limit guaranteed by the Fund. Total amount of compensation of 8 November 2016 stood at UAH 177.2 million.
The beneficial owners of ARTEM-BANK JSC are Paradygma LLC (the beneficial owner - Mr Borys Lemper, an Israeli citizen), Mr Oleksandr Kachura (holding a 7.08% stake), and Artem State Joint-Stock Holding Company (holding a 0.83% stake).