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RADICAL BANK PJSC and JSB STOLYCHNYY PJSC declared insolvent

On July 9, 2015, the National Bank of Ukraine declared RADICAL BANK PJSC and JSB STOLYCHNYY PJSC insolvent.

As regards RADICAL BANK PJSC

The inspection of RADICAL BANK PJSC’s operational cashier desks and its branches revealed gross breaches of the applicable laws governing cash circulation, which posed a threat to the interests of depositors and other creditors of the bank.

RADICAL BANK PJSC failed to ensure a proper level of security during the transportation of currency valuables and their safe storage at the bank’s branches and exercise internal control over cash transactions.

The National Bank of Ukraine takes a tough line on banks that perform risky transactions that might put at stake the funds stored at the bank.

In view of the above, and in order to protect the interests of depositors and other creditors,  the Board of the National Bank of Ukraine adopted a decision to declare RADICAL BANK PJSC insolvent (NBU Board resolution No452/BТ of July 9, 2015).

With regard to JSB STOLYCHNYI PJSC

In view of risky activities performed by JSB STOLYCHNYI PJSC, leading to the deterioration of its financials, which posed threats to the interests of depositors and other creditors of this bank, the National Bank of Ukraine held talks with the bank’s shareholders and managers urging them to take measures to bring the bank's activities into conformity with the applicable laws, including the NBU regulations.

However, JSB STOLYCHNYI PJSC failed to take the necessary measures, its performance indicators deteriorated markedly, leading to the bank's non-compliance with the regulatory requirements set by the National Bank of Ukraine.

In addition, this bank failed to meet its obligations to the depositors and other creditors.

In violation of Article 58 of the Law of Ukraine On Banks and Banking, the qualifying shareholders of JSB STOLYCHNYI PJSC failed to take timely measures to prevent the bank from slipping into insolvency.

Pursuant to the first part of Article 76 of the Law of Ukraine On Banks and Banking, the National Bank of Ukraine is obliged, not later than 180 days from the date the bank was adjudicated a problem bank, to adopt a decision on declaring the bank insolvent if a bank that has been declared a problem bank fails to bring its activities into conformity with the applicable laws, including the NBU regulations.

In view of JSB STOLYCHNYI PJSC’ failure to take the appropriate measures to remedy breaches of the NBU regulations and the bank’s inability to meet creditors' claims on the repayment of deposits and execute payment transactions, given the bank’s financial standing and the fact that the bank was in breach of the applicable banking laws, the Board of the National Bank of Ukraine adopted a decision on declaring JSB STOLYCHNYI PJSC insolvent (NBU Board resolution No. 453, dated July 9, 2015).

As a side note, according to the applicable Ukrainian laws,  RADICAL BANK PJSC and JSB STOLYCHNYY PJSC that have been declared insolvent shall be placed under jurisdiction of the Deposit Guarantee Fund (hereinafter – the Fund), which shall appoint the provisional administration and authorized officials to these financial institutions.   The Fund guarantees the reimbursement of deposits to all depositors who will receive compensation for the amount of their deposit, including the interest accrued thereon on the date when the National Bank of Ukraine adopts a decision to declare the bank insolvent and the Fund initiates a winding-up procedure against this bank, but up to the compensation limit established on the date of the respective decision, regardless of the number of deposits held in one bank. 

Information for depositors of RADICAL BANK PJSC and JSB STOLYCHNYY PJSC is  available on the Fund's website.

For reference

As of July 10, 2015, 129 banks operate in Ukraine (excluding banks under provisional administration) including 40 banks with foreign capital. 

During 2014 – 2015, within the framework of banking system clean-up, the National Bank of Ukraine adopted 53 decisions to put banks into the category of “insolvent banks”, including 20 decisions made in 2015. In 2014 - 2015, banking licenses were revoked from 44 banks that were liquidated (including the banking licenses held by banks located in AR Crimea and Sevastopol, which were cancelled). Among them 25 licenses were withdrawn in 2015.

In total, as of today, the category  of insolvent  banks  comprises  11 banks, while 49 banks  are under liquidation.

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