On 10 December 2015, the National Bank of Ukraine, at the suggestion of the Deposit Guarantee Fund, adopted Resolution No. 876 On Revocation of the Banking License and Liquidation of Bank Kontrakt PJSC.
In September 2015, the National Bank received a number of complaints by legal entities concerning payment failures in Bank Kontrakt PJSC, which resulted in a curator being appointed to the bank to study the situation in some detail.
The curator revealed a sizable amount of customer payment failures that were concealed under different balance sheet accounts. Moreover, a cash shortage worth more than UAH 12 million was uncovered in the cash desk (UAH 5.1 million actually present against UAH 17.1 million according to data reported to the NBU). The bank management has accounted for this discrepancy as inaccurate compilation of reporting.
To improve the appearance of its financial performance, the bank also used fictitious transactions with securities, which actually distorted the financial reporting. In addition, the bank started selling its property to third parties without the actual receipt of funds (with delay in payments, at the expense of securities resale, etc.).
Insufficient liquidity funds, customer payment failures, and systematic distortion of financial reporting threatened depositors and customers of Bank Kontrakt PJSC.
The bank has been classified as insolvent pursuant to paragraph 3 of the first part of Article 76 of the Law of Ukraine On Banks and Banking, under which the NBU must take a decision on classification of the bank as insolvent if the bank does not fulfill two or more percent of its obligations to customers and other creditors over five consecutive business days.