NBU declares bank Kontrakt as insolvent

The board of the National Bank of Ukraine (NBU) has placed public joint-stock company bank Kontrakt on the list of insolvent banks under resolution No. 671 of October 6, 2015, the NBU said in a report on Wednesday.

"Not enough liquidity, the non-settling of clients' payments and systemic misrepresentation of the financial reports created threats for depositors and the creditors of bank Kontrakt," the NBU said.

The regulator said that in September 2015, the NBU received claims from companies that their payments have not been settled by the bank and a curator was introduced to the bank to study the situation, and the curator confirmed the large amount of unsettled clients' payments, while the bank hid this information.

"Short payments of over UAH 12 million in the cash department were found… The bank also used fraudulent transactions with securities, which is a misrepresentation of the financial report," NBU said.

The bank started selling its assets to third parties without actually receiving cash, which led to payments being postponed due to the resale of securities.

The regulator said that since the curator was appointed neither the managers nor the owner of the bank addressed the NBU on readjustment plans.

Bank Kontrakt was founded in 1993. As of April 1, 2015, its largest shareholders were Bimen LLC (21%), Futures LLC (49.77%) and Forma-K LLC (23.95%).

The bank ranked 82nd among 127 operating banks as of July 1, 2015, in terms of total assets worth UAH 740.1 million, according to the NBU.