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MEGABANK JSC Declared Insolvent

MEGABANK JSC Declared Insolvent

The NBU Board has approved the decision to declare MEGABANK JSC insolvent due to the bank’s failure to align its activities with the applicable laws, including NBU regulations, after it was declared a problem bank and after the bank’s noncompliance with NBU requirements to eliminate breaches of Ukrainian laws within the term set by the NBU.  

The problems in the bank’s activities were not caused by the imposition of martial law. They started long before the war. 

On 3 February 2022, the NBU Board, in accordance with Article 75 of the Law of Ukraine On Banks and Banking, adopted the decision to declare MEGABANK JSC a problem bank.

The reasons for declaring the bank insolvent include: 

  • significant violations of NBU regulations on credit risk assessment
  • regular lending to related parties 
  • large share of noncore assets on the bank’s balance sheet 
  • nonimplementation of the recapitalization/restructuring plan based on the stress test conducted in 2021.

As a result of banking supervision over the operation of MAGABANK JSC, the NBU repeatedly drew attention of the bank’s managers and shareholders to potential risks in the bank’s activities. 

Pursuant to Article 58 of the Law of Ukraine On Banks and Banking, qualifying shareholders in a bank are obliged to take timely measures to prevent the bank’s insolvency. However, the shareholders of MEGABANK JSC did not provide financial support to the bank to fulfill its obligations to customers and make customer payments in full in a timely manner, as evidenced by numerous complaints that continued to be reported to the NBU after the bank was declared insolvent.

Said financial institution accounts for 0.46% of solvent banks’ net assets. Classifying MEGABANK JSC as insolvent will not influence the stability of the Ukrainian banking sector, which remains resilient and solvent. 

After the Law of Ukraine No. 2180-IX On Amendments to Certain Laws of Ukraine Concerning Ensuring the Stability of the Households Deposit Guarantee System dated 1 April 2022 came into force, the DGF has been reimbursing to each MEGABANK JSC depositor the amount of their deposit, including interest accrued as of the end of the day before the date of the resolution procedure, unless otherwise provided for by Article 26 part four of the Law of Ukraine On Households Deposit Guarantee System. The total possible amount of guaranteed payments to depositors as of21 May 2022 is UAH 4,418.6 million.

MEGABANK JSC was declared insolvent by NBU Board Decision No. 261 dated 2 June 2022.

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