The Board of the National Bank of Ukraine adopted a decision to declare Ukrinbank PJSC insolvent. Resolution No. 934, dated 24 December 2015, has been issued to this effect.
The majority of the Bank’s depositors (53 thousand depositors, or 95.5% of the total number of depositors), whose deposits are subject to compensation by the Deposit Guarantee Fund (DGF), will be paid out in full. The DGF will pay out a total of over UAH 1.9 billion in compensation to eligible depositors.
During September 2015, the Bank’s instant liquidity ratio (Н4) fell below the regulatory minimum value of 5 percent or more, being five-fold lower than the minimum required level. With a view towards protecting the interests of the bank’s depositors and other creditors, on 1 October 2015, the NBU Board adopted a decision to declare Ukrinbank PJSC a problematic bank. The NBU set a timeframe for Ukrinbank PJSC to bring its activities into line with applicable laws.
Following the established procedures, the NBU held meetings with the management team and owners of Ukrinbank PJSC to explore ways to improve the bank's financial position. Ukrinbank PJSC presented a resolution plan that envisaged the involvement of an investor to inject UAH 500 million into the bank to recover its liquidity. As part of the measures set forth in the plan, Ukrinbank PJSC registered with the NBU a loan agreement to raise funds from a non-resident investor. However, the bank never received these funds.
In spite of the fact that the Bank stepped up its efforts to recover loans, including non-performing loans and a search for investors, it failed to stem the outflow of deposits and stabilize its liquidity. This was evidenced by the fact that the NBU received numerous complaints (300 complaints have been received since October) from the Bank’s clients regarding the Bank's failure to repay deposits and execute settlement documents. As of 21 December 2015, unexecuted settlement documents totaling UAH 52 million due to the bank’s fault were recorded in the bank’s books.
Therefore, Ukrinbank PJSC was unable to settle creditors' legal claims in due time and in full due to a shortage of funds, and its activities failed to comply with the requirements of applicable banking laws and NBU regulations.
In view of the Bank’s failure to comply with the requirements of applicable banking laws and NBU regulations, a decline in its financial performance, and a deterioration in its financial standing, as well as Ukrinbank PJSC’s failure to fulfil its recovery plan, the NBU had to adopt a decision to declare this bank insolvent.
For reference: As of 21 December 2015, Mr Volodymyr Klymenko (a 66.99% stake) and Mr Oleksandr Morozov (a 10% stake) were the Bank’s qualifying shareholders.