On November 20, 2014, in compliance with Article 76 of the Law of Ukraine "On Banks and Banking", the National Bank of Ukraine Board passed Resolution No. 732 declaring Public Joint-Stock Company “CITY COMMERCE BANK” insolvent.
Pursuant to applicable laws, on November 21, 2014, the Deposit Guarantee Fund appointed the provisional administration and an authorized person to CITY COMMERCE BANK PJSC (hereinafter – the Bank).
In April 2014, the National Bank of Ukraine conducted a limited scope inspection at the Bank in view of the deterioration in the financial standing of the Bank and receipt of complaints about the Bank's failure to meet its obligations to clients. The inspection has revealed facts of the Bank's failure to meet clients' claims on time and multiple breaches of banking laws.
As part of established procedures, the regulator has held talks with the management team and shareholders of the Bank to seek ways to put the bank back on a sound footing. However, upon the results of inspection conducted in May, the Bank was classified as problematic and placed under special supervision through the appointment of an NBU overseer. The National Bank of Ukraine has set a deadline for the Bank to adopt corrective measures to bring its operations into compliance with applicable laws.
The Bank has submitted the financial rehabilitation plan to the National Bank of Ukraine. However, given that the measures included in the plan did not allow the Bank to fully meet its obligations to clients and improve its financial health, this plan with numerous regulator’s comments has been returned to the Bank several times so that the Bank would alter it.
During May – October, the Bank’s owners took measures to inject additional capital in the bank by placing funds with the Bank on subordinated debt terms, which enabled the Bank to partially meet its obligations to clients.
However, the measures taken by the Bank’s owners proved insufficient to enable the Bank fully meet the its obligations to clients and help it avoid going insolvent, as evidenced by numerous complaints filed to the National Bank of Ukraine after the Bank was declared problematic.
As First Deputy Governor of the National Bank of Ukraine Oleksandr Pysaruk said, the central bank's top priority is to ensure the smooth and transparent operation of the banking system.
"The National Bank of Ukraine remains involved in efforts to purge the banking system, in particular, from insolvent banks that cause problems for depositors and do not create any value for the economy. The health of the banking system, the provision of liquidity support to solvent banks and assistance in addressing temporary problems, the protection of the interests of depositors and creditors of banks are among the top priorities of the National Bank of Ukraine,” emphasized Oleksandr Pysaruk, adding that the Deposit Guarantee Fund would pay out the guaranteed compensation to depositors in the shortest possible time.