In compliance with the requirement of Article 76 of the Law of Ukraine On Banks and Banking, on February 5, 2015, the National Bank of Ukraine Board adopted Resolution No. 83 declaring Public Joint Stock Company "COMMERCIAL BANK "NADRA" (hereinafter – CB NADRA PJSC) insolvent.
The main rationale behind this decision is the insufficient capitalization of the bank, its failure to meet the stress test capital requirements and inability to bring its operations in line with applicable Ukrainian laws.
The National Bank of Ukraine emphasizes that 99% of all the depositors of CB NADRA PJSC hold deposits falling below the minimum guaranteed amount of UAH 200 thousand, which makes them eligible for remuneration by the Deposit Guarantee Fund.
Some customers holding deposits in excess of this amount (approximately 1% of all the depositors) will receive compensation up to the amount insured by the Fund.
Total amount of compensation payments due to eligible depositors amount to over UAH 3.6 billion.
The National Bank of Ukraine points out that CB NADRA PJSC was declared insolvent because this bank has been non-viable since the appointment of provisional administration to this financial institution in 2009. The provisional administration was appointed to CB NADRA PJSC for many reasons, including the bank's involvement in risky activities and mismanagement of the previous management team chaired by I.V. Gilenko who led the bank into bankruptcy. Yet, further efforts and measures taken by the new management team of CB NADRA PJSC to place the bank on a sound footing and bring its activities and operations in compliance with prudential regulations appeared to be insufficient in the wake of the financial and economic crisis.
In accordance with recommendations provided by the regulator, CB NADRA PJSC has submitted plans designed to inject additional capital into the bank. However, the National Bank lacked the grounds to deem the bank viable as an expert evaluation of the resolution plans suggested that the bank would produce further losses in the future. In addition, the implementation of these plans was conditional on restructuring of loans with a maturity of 10 years that had earlier been granted to CB NADRA PJSC by the National Bank of Ukraine on preferential terms.
Therefore, the shareholders of CB NADRA PJSC failed to confirm their readiness to provide operational financial support needed, among other things, to settle debt obligations acquired by the previous shareholder. This led to further deterioration of performance indicators and bank's failure to meet its obligations to depositors and other creditors on time.
Commenting on this decision, First Deputy Governor of the National Bank of Ukraine stressed: “If the National Bank of Ukraine had accepted the bank capitalization terms proposed by the bank shareholders, it would have meant that preferential conditions were offered to one financial market player, which goes against the regulator's policy of creating a level and transparent playing field for all market participants.
He also said that the National Bank of Ukraine was making consistent efforts to purge the banking sector and would persist in its efforts to remove from the market those banks whose owners have failed to provide sufficient financial support. "We confirm our commitment to leave on the market only reliable and transparent banks operating in an efficient manner and meeting their obligations on time. It is a necessary condition for economic recovery, economic growth and the welfare of Ukrainian citizens," said Oleksandr Pysaruk.