Ukraine's central bank declares Boguslav Bank insolvent

The bank's management and owners were taking measures in August-October to meet the requirements for additional capitalization by paying off non-performing assets and increasing loan support. However, the financial institution had failed to raise its charter capital as of November 1, the report said.

Read alsoUkrainian Deposit Guarantee Fund assets shrink to almost $14 bln in Aug"The regulatory capital of Boguslav Bank was below one-third of the minimum level on November 1, 2017," the regulator said.

Referring to the data of the Deposit Guarantee Fund (DGF), the NBU assured that 96%, or 5,600 depositors of Boguslav will receive their deposits in full since their amount does not exceed the guaranteed UAH 200,000.

It is also reported that Volodymyr Romanenko and Nataliya Vakulenko have owned a major stake in the bank as of November 1.

Read alsoSolvent banks in Ukraine make UAH 1.4 bln since year-startBoguslav has become the ninth financial institution withdrawn from the market since the year-start as a result of ongoing large-scale banking system purge, in which 33 banks were declared insolvent in 2014, another 33 – in 2015, and 21 – in 2016.

Suspended head of Ukraine's State Fiscal Service Roman Nasirov kept UAH 1.677 million in his accounts in Boguslav, according to the state register of declarations of persons authorized to perform state or local government functions.

He also declared UAH 2.852 million in the said bank account of his wife.

The DGF reported later that the temporary administration headed by Serhiy Kalugin had been operating in the bank since 13:00, November 6. It was introduced for one month, until December 5, 2017 inclusive. The Fund is to inform the bank depositors about the time and procedure of payments additionally.

UNIAN memo. Under laws of Ukraine, the charter capital of banks cannot be less than UAH 500 million. The National Bank set a relevant schedule of additional capitalization for Ukrainian banks and obliged them to raise their capital to UAH 200 million by July 11, 2017; to UAH 300 million by July 11, 2018; to UAH 400 million by July 11, 2019; to UAH 450 million by July 11, 2020, and to UAH 500 million by July 11, 2024.

In practice, the NBU requirements proved to be unfeasible for a number of banks, while the regulator had questions about the sources of capital used for additional capitalization by some shareholders. The National Bank has already made some decisions to remove the financial institutions from the market for their failure to meet the requirements.

The Verkhovna Rada of Ukraine on March 23, 2017, passed a draft law on simplification of procedures for bank capitalization and restructuring and President Petro Poroshenko enacted it on April 26. The law allows banks to stop using a banking license without liquidating a legal entity and continue their operation as a non-bank financial institution. However, they must have no debts before their depositors. So far, only a few banks have expressed their desire to take advantage of the law, including Apeks-Bank, Financial Partner, Industrial-Financial Bank.

In early October, the National Bank announced plans to revise the schedule of mandatory additional capitalization of small-sized banks, stretching it for a longer period.