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Ukrgazprombank PJSC declared insolvent

On April 7, 2015, Ukrgazprombank PJSC (hereinafter- the Bank) was declared insolvent by the National Bank of Ukraine.

This decision was made in light of the Bank's involvent in risk-taking operations, as reflected by a deterioration in the bank's financials in January 2015.

The poor financial standing of the Bank required its shareholders and management team to take urgent efficient measures aimed at improving the financial health and soundness of the Bank and eliminating the causes of such deterioration.

To stabilize the situation, the management team of the National Bank of Ukraine has held a succession of meetings with the managers and potential investors of the Bank. However, the owners of qualifying holding in the Bank, in violation of Article 58 of the Law of Ukraine On the National Bank of Ukraine, have failed to take timely measures to prevent the Bank from slipping into insolvency.

The Bank also failed to fulfill 10 or more percent of its obligations to depositors and other creditors, and recorded claims thereunder in off-balance-sheet accounts for 10 business days running.

In addition, the bank’s regulatory capital turned negative, having decreased to below one third of the minimum amount stipulated by the applicable law, and/or NBU regulations.

In view of the above, in compliance with Articles 7, 15, and 55 of the Law of Ukraine on the National Bank of Ukraine, and articles 67, 73, 75, and 76 of the Law of Ukraine On Banks and Banking 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 Ukrgazprombank PJSC insolvent (NBU Board Resolution No 217, dated April 7, 2015).

As a side note, according to the applicable Ukrainian laws, the bank declared insolvent shall be placed into the hands of the Deposit Guarantee Fund (hereinafter – the Fund)  that shall appoint the provisional administration and authorized officials to this financial institution. 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 the respective decision is adopted, regardless of the number of deposits held in one bank.

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