The National Bank of Ukraine (NBU) has included Kyiv-based VAB Bank into the category of insolvent banks, the NBU said in a statement.
“On Nov. 20, 2014, the NBU board… passed resolution No. 733 to include PJSC All-Ukrainian Joint-Stock Bank [VAB Bank], into the category of insolvent banks. In keeping with the laws, the Individuals’ Deposit Guarantee Fund as of Nov. 21, 2014, introduced provisional administration at the said bank,” the statement reads.
The NBU says that since April 2014 it has repeatedly informed VAB Bank’s managers and owners about potential risks for the bank’s operation, which were revealed as a result of bank supervision.
To protect the interests of bank depositors and other creditors, the NBU in October 2014 included this bank into the category of troubled banks.
VAB Bank prepared a financial readjustment plan, which foresaw a financial bailout by bank stockholders for a specified period. However, the bank owners’ proposals to boost the bank’s capital have turned to be insufficient to support its solvency.
The NBU also said that the bank hadn’t met the criteria for the participation of the state in the bank’s additional capitalization. The criteria were approved by the council of experts and analysts for the state’s participation in banks’ charter capital on July 3, 2014.
The NBU claims that international bank recapitalization standards implemented by the NBU under a program with the International Monetary Fund do not foresee the state’s participation in recapitalization when a bank issues a large amount of loans to economically affiliated entities.
“PJSC VAB Bank’s stockholders did not provide real financial support for the bank, which resulted in the further worsening of its financial performance, infringement by it of economic requirements and the bank’s inability to meet its obligations before depositors and other creditors on time,” the statement reads.
By Nov. 14, 2014, the bank’s regulatory capital had shrunk to ‘minus’ Hr 1.511 million when the required positive level is Hr 120 million, the NBU said.
The NBU claims it has made its utmost to support the bank’s liquidity to ensure payments to bank depositors.
“Due to the lack of sufficient sources to recapitalize the bank, the NBU was compelled to include the bank into the category of insolvent banks. We’re sure that the Individuals’ Deposit Guarantee Fund will ensure the payment of guaranteed compensations to bank depositors within the shortest time possible and take necessary measures to efficiently withdraw PJSC VAB Bank from the market while meeting creditors’ claims as fully as possible,” NBU First Deputy Governor Oleksandr Pysaruk is quoted by the NBU’s press service as saying.
