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. 733 declaring Public Joint-Stock Company “VAB BANK” insolvent.
Pursuant to applicable laws, on November 21, 2014, the Deposit Guarantee Fund appointed the provisional administration and an overseer to the above said bank.
Since April 2014, following the results of banking supervision over activities of Public Joint-Stock Company “VAB BANK” (hereinafter – VAB BANK PJSC), the National Bank of Ukraine has repeatedly warned the bank management team and its shareholders of potential risks arising from the operation of VAB BANK PJSC.
In order to protect the interests of depositors and other creditors of the above said bank, in October 2014, the National Bank of Ukraine adopted a decision to place VAB BANK PJSC into the category of problematic banks. The National Bank set a deadline for VAB BANK PJSC to adopt corrective measures to bring its operations into compliance with applicable laws.
As part of established procedures, the National Bank of Ukraine has held talks with the management team and shareholders of VAB BANK PJSC to seek ways to improve financial health of the bank. VAB BANK PJSC has submitted the financial rehabilitation plan that stipulated the provision of financial support by the bank's shareholders within the established deadlines. However, the bank's owners' efforts to increase the bank's capital fell short of the amount required to keep the bank afloat. It should also be noted that VAB BANK PJSC does not meet the eligibility criteria allowing the government to step in to inject capital into the bank, which was approved by Decision of the Expert and Analytical Council for Government Participation in Bank Capitalization, dated July 3, 2014. In addition, the international recapitalization standards, which the National Bank of Ukraine adopts as part of the IMF-supported program, do not envisage participation of the government in recapitalization of the bank if it has granted a substantial amount of loans to related parties.
Therefore, the shareholders of VAB BANK PJSC have failed to provide the required financial support to the bank, which led to further deterioration in its financial standing, violation of prudential standards and the bank's inability to meet its obligations to depositors and other creditors on time. In particular, Report on adherence to prudential standards and limits on the open foreign exchange position, has shown a decrease in the amount of regulatory capital of the bank as of November 14, 2014 – "-" UAH 1,511 million (minimum regulatory capital requirement – no less than UAH 120 million).
As Deputy Governor of the National Bank of Ukraine Oleksandr Pysaruk emphasized, the regulator has put the most efforts to provide liquidity support to VAB BANK PJSC to ensure its ability to repay deposits to depositors.
"Given the lack of resources to recapitalize the bank, the National Bank of Ukraine was compelled to adopt a decision to declare the bank insolvent. We are confident that the Deposit Guarantee Fund will pay compensation to depositors in the shortest terms and will do what is required to remove VAB BANK PJSC from the market in an efficient manner in order to fully meet the creditors' claims," he noted.