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“The team was recently visible advising on a number of pharmaceutical cases. Sources agree that the team is “moving in the right direction” and are particularly impressed by its work in the pharmaceutical sector”.


On the Effects of Withdrawal of Ukrainian Banks from the Crimea


Oleksandr Vygovskyy, Doctor of law, Attorney at law at Ilyashev & Partners
Source: RBC-Ukraine

Closing branches of the Ukrainian banks in the Crimea does not entail tacit termination of their obligations to clients. Therefore, if borrowers stop servicing the loans taken, the Ukrainian banks may impose any legal sanctions, including court fees, when collecting debt. Although the Ukrainian banks are considered as foreign legal entities in the Crimea, they have the right to judicial protection of their interests in the courts of the Crimea and Sevastopol.

The clients of PJSC CB “Privatbank”, for example, can settle their loan debt by cooperating with the Depositors Insurance Fund (DIF).

Pursuant to ruling of the Central District Court of Simferopol dated April 21, 2014, the DIF acted as trust manager of Privatbank’s property in the Crimea and performed trust management of the rights of claim under bank loans to individuals and legal entities. The Fund opened a special account for the clients of Privatbank to transfer loan repayment funds. Payments on loans are accepted in Russian rubles at the rate of the Bank of Russia on the date of payment. The clients of Privatbank can make reconciliation of debt and calculation of payments in the Fund’s representative office. In this case the borrower’s obligations will be deemed performed and the grounds for penalties will not occur.

At present, return of deposits to depositors of the Crimean banks has not been completed yet. It is conducted through the Depositor’s Insurance Fund created in accordance with a special law of the Russian Federation for the protection of interests of individuals who have bank deposits in the Crimea. The law was adopted on April 2, 2014. According to this law, individual clients, including entrepreneurs, can apply for refunding deposits amounting to RUR 700 thousand (about UAH 217 thousand) if their contributions were placed in the Crimean banks before April 1, 2014.

If the deposit for a larger amount was placed, the depositor can either instruct the Fund to represent his/her interests when collecting money from the bank or try to get the funds on his/her own (although, in practice, the chances of success are minimal in this case). Eligibility for compensation of payments arises after the Bank of Russia approves decision on closing the structural unit of the Ukrainian bank in the Crimea. The respective amounts are transferred in rubles at the rate set by the Bank of Russia to the accounts in the authorized banks.

Decisions on payments to clients of each Ukrainian bank, which decided to leave the Crimea, will be approved individually.
Back in April the DIF began to accept applications for payment of individual deposits of four Ukrainian banks, namely PJSC CB “Privat”, JSC “Imexbank”, PJSC “Bank “Kyivska Rus” and PJSC “VAB Bank”, which the Bank of Russia prohibited to work in the Crimea since April 21, 2014.

Payments began on May 8, 2014. On this date the decisions to pay 1.9 thousand depositors for RUR 420 mln were made. Crimean depositors of these banks are entitled to compensation after the signing of documents on assignment of the rights of claim on deposits and agreement on opening a new account in one of the authorized banks, namely Black Sea Bank for Reconstruction and Development and the Russian National Commercial Bank. Compensation is paid without charging any fees.

Currently, the list of banks, which depositors obtain payments, has 38 banking institutions (including Bank “Forum”, “Raiffeisen Bank Aval”, Bank “Nadra”, “Ukrgazbank”, “Ukrsotsbank”, “UkrSibbank”, etc.). The DIF plans to take up to 300 thousand depositors’ applications, and total payments may amount to 30 billion rubles.

In its ruling No. 260 of May 6, 2014, the NBU banned Ukrainian banks to establish correspondent relationships with Ukrainian and foreign banks located or operating in the Crimea. Thus, the regulator banned any cooperation of the Ukrainian banks with the RF banks working in the Crimea.

Moreover, the draft law “On tax and customs control in a free economic zone of the Crimea and the peculiarities of economic activity in the temporarily occupied territory of Ukraine”, which was adopted by the Parliament in first reading on June 19, 2014, provides prohibiting banks to operate in the territory of Ukraine if they are in the banking group created under the laws of the RF, or if the group includes financial institution of the RF.

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