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UKRKOMUNBANK PJSC declared insolvent

On May 12, 2015, the National Bank of Ukraine declared PUBLIC JOINT STOCK COMPANY "UKRKOMUNBANK" (hereinafter – UKRKOMUNBANK PJSC) insolvent.

Considering the situation in the city of Luhansk due to the conduct of an anti-terrorist operation, the occurrence of threats to life and health of employees and clients, as well as the inability to perform operations due to technical problems, UKRKOMUNBANK PJSC adopted a decision to temporarily suspend its operations.

In accordance with the requirements of the Instruction on the operation of the banking system in the emergency regime approved by NBU Board Resolution No 435, dated July 22, 2014, the National Bank of Ukraine blocked this bank's incoming and outgoing initial payments effected through the System of Electronic Payments (hereinafter – the SEP), effective August 31, 2014.  In view of the expiry of the validity period of the SEP software- and hardware-based data security keys, on October 17, 2014, UKRKOMUNBANK PJSC was temporarily removed from the list of the SEP participants.

Meanwhile, the National Bank of Ukraine was receiving numerous complaints from this bank's customers about the bank's failure to execute payments or money transfers.

In addition, UKRKOMUNBANK PJSC failed to fulfil 10 or more percent of its obligations to depositors and other creditors for 10 business days running.

At the same time, since the suspension of the bank's operations the shareholders and managers of UKRKOMUNBANK PJSC  have failed to take proper measures to bring the bank's operations into compliance with applicable laws, including the NBU regulations, in particular, in terms of ensuring the bank's ability to operate in the premises of UKRKOMUNBANK PJSC located in the city of Kyiv, and undergoing the state registration procedure in the government-controlled territory in order to meet its obligations to creditors and depositors and hold talks with borrowers over the repayment of the outstanding debts.

Give the above, in order to protect the interests of depositors and other creditors of the bank, in compliance with Articles 7, 15, 55 of the Law of Ukraine On the National Bank of Ukraine, and Articles 67, 73, 75, 76 of the Law of Ukraine On Banks and Banking, the Board of the National Bank of Ukraine has adopted a decision to declare UKRKOMUNBANK PJSC insolvent (NBU Board Resolution No 309/BT, dated May 12, 2015).

According to the applicable Ukrainian laws, the bank that has 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 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.

For reference

As of 13 May 2015, 132 banks operate in Ukraine (without banks under temporary administration) including 40 banks with foreign capital.

During 2014 – 2015, within the framework of banking system clean-up, the National Bank of Ukraine adopted 48 decisions to put banks into the category of “insolvent banks”, including 15 decisions made in 2015. In 2014 - 2015, banking licenses were revoked from 36 banks that were liquidated (including the banking licenses of 2 banks located in AR Crimea and Sevastopol, which were cancelled). Among them 17 licenses were withdrawn in 2015.

In total, as of today, the category of insolvent banks comprises 14banks, while 41 banks are under liquidation.

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