Ostap Bender, as is well known, knew 400 ways to "relatively honestly extort money." Domestic bankers are persistently developing and deepening the creative legacy of the Great Schemer, but their record of "honesty" is far worse than that of the "son of a Turkish subject."
Some banks are especially zealous during the various crises that regularly plague Ukraine. They skillfully find a thousand and one ways to avoid returning depositors and other bank clients' hard-earned money, even when the legal deadline for such return has long since passed. For example, the formerly solid mid-tier CityCommerceBank has come up with a rather ingenious "cash-for-money" scheme, which ostensibly returns your money, but in reality, it's impossible to get it back, even with very modest deposits. A brief description of this scheme, along with some conclusions, assumptions, and suggestions for regulatory and law enforcement agencies, may be of interest to the general public, as it's quite possible that a similar "cash-for-money" scheme could be used by other banks.
The following text is based on actual events that the author personally experienced. The issue concerns PJSC "City Commerce Bank," which operates under the CityCommerceBank brand and has its registered office at 33 Solomyanska Street, Kyiv, 03141. The events described below occurred and continue to occur at Branch No. 23 of this bank, located at 2A Mechnikova Street, Kyiv, 01601. Communication at this branch is exclusively with entry-level staff, who diligently repeat memorized phrases handed down by higher-ups. All attempts to communicate with even the branch's management over the past several months have been met with excuses from staff, claiming that management is extremely busy and either at an important meeting, at the head office, or elsewhere.
Although there's not much to discuss, the main point is clear: for six months now, the bank has been failing to return deposits within the agreed-upon expiration dates, essentially forcibly extending the contracts and grossly violating property rights. Even receiving interest on deposits is virtually impossible.
Vain hopes of spring
Problems at the bank began back in March 2014, just as the Maidan revolution had died down. Bank employees declared it impossible to repay the deposit within the agreed-upon timeframe, citing temporary issues that would supposedly be resolved soon. They offered to renew the agreement for another month, saying that by then everything would be sorted out. However, interest on the deposit was paid.
Then, on April 30, after the new deadline expired, bank employees stated that the deposit might be returned, but in instalments of no more than 500 hryvnias per day. Obviously, if the deposit amount is, for example, a modest 25 hryvnias, which have recently depreciated sharply, the return of the entire deposit would take many months. When asked about the basis for setting the daily amount at 500 hryvnias, bank clerks cited certain internal regulations of the bank's management. However, the bank refused to provide these internal regulations, claiming they are either classified or confidential, and the basis for this is unclear. When a client complained that the National Bank actually sets a daily limit of 150 hryvnias, not 500 hryvnias, the bank shrugged, implying that not everyone is so smart and familiar with the central bank's regulations, and that within the walls of this institution, it is customary to follow the instructions of one's superiors, not "some" National Bank.
But overall, at the end of April this year, bank clerks were still trying to reassure clients, promising that the problem would definitely be resolved after the May holidays, as bank management had allegedly already negotiated a refinancing deal with the National Bank. In short, they suggested not to raise any unnecessary fuss before the protracted holidays, but to renew the deposit agreement for another month, and then, supposedly, everything would be resolved to their mutual satisfaction. However, this time, too, interest was paid, amounting to a couple of hundred depreciated hryvnias.
Then the situation worsened significantly...
Complete autumn-summer chaos
In the summer, the bank stopped forcibly renewing deposit agreements for a new term, in this case, a month. Initially, they decided to limit this to an addendum to the last agreement for the same month. Then, they added a so-called extension feature to deposit agreements, meaning that upon expiration of the previous term, the document would automatically be extended for the same period, for example, a month. However, in this case, the client would have no document clearly stating the end date of the next "mandatory extension" of the agreement or the deposit interest rate during the extension. It was a one-sided game: the new extension terms were reflected only in the bank's computer and therefore easily subject to possible manipulation, while the client had no documentary evidence of the new terms in the form of a bilateral document.
After several scandals, the bank finally got around to issuing a "statement of account activity" with each extension, which indicated, among other things, the deposit amount, the new interest rate, and the "extension end date." However, this so-called document is essentially one-sided and is sealed on the bank's side not with a round corporate seal and the manager's signature, but with a simple square "operating" seal and the signature of an ordinary manager. In short, this document is more than questionable in terms of its potential as evidence in court.
But the bank has become completely brazen when it comes to deposit refunds. At each expiration of the deposit agreement, the client is presented with a dilemma. The first option, the same as the previous one, is to renew the deposit agreement again, and the process begins anew. The second option is not to renew the deposit agreement, in which case the funds from the deposit account will be transferred to a current account, where interest is not accrued at all. After this, the funds can theoretically be withdrawn, but the "500 hryvnia rule" comes into effect, meaning the client will have to choose their deposit until the "second coming."
The trick is that with the second option, the bank formally returns the deposit. After all, only a deposit agreement has such a crucial parameter as the term and the date of return of funds to the depositor. But for a current account, such parameters are completely absent. The money ends up in the current account, free of obligations, and the fact that the client can't actually withdraw it is another matter. Bank clerks issue the client a cash disbursement order for those same 500 hryvnias, but it turns out that even this paltry sum is now actually impossible to withdraw from the bank! Incidentally, with the first option, that is, when extending the deposit agreement, the client, starting somewhere in early to mid-summer, will not be able to receive the same interest rate—no more than 500 hryvnias per day.
The money is yours, but… not yours
The problem is that the ATMs have been out of service for a long time, and the cash registers are usually empty. Or rather, they do exist, but very rarely: a couple of times during the banking day, small amounts are brought into the register, but they quickly run out. It seems the bank doesn't have a proper cash supply, and sometimes snatches small amounts of cash during retail collections and similar transactions.
One of the most significant problems here is the fact that the bank serves a large number of pensioners who receive their pensions through the bank. Since the bank's ATMs have long been out of service, and ATMs at other banks apparently don't accept cards issued by CityCommerceBank due to the latter's insolvency, pensioners stand in huge queues of hundreds every day early in the morning. The situation is further exacerbated by the "500 hryvnia rule," which requires several visits to withdraw the entire pension amount. Apparently, pensioners were fooled into receiving their pensions through the bank by aggressive advertising about some "extremely favorable terms," when they could have received their pensions directly at home, where the postman delivers the money for a very modest fee.
Due to the above, the average working citizen, who does not have the time to stand at the bank's cash desk for days on end, is deprived of the opportunity to receive interest on infinitely renewable deposit agreements, not to mention receiving any significant deposit amount in instalments of 500 hryvnia per day.
How long ?!
In connection with the above, questions arise for a number of government agencies.
First of all, questions for law enforcement. For over six months now, PJSC Mis'kyi Komertsiinyi Bank has been using various tricks and fraudulent schemes to prevent depositors from receiving their hard-earned money. This is a flagrant violation of citizens' constitutional rights, as well as a violation of not only civil but also criminal law. The prosecutor's office should have intervened long ago.
A question for the Pension Fund. The pension issue is extremely disturbing. Elderly people are fainting in lines after standing for weeks to receive their pensions. The Pension Fund transfers funds to the designated bank for pension payments, but pensioners are delayed in receiving their hard-earned money, and often fail to receive it at all. Meanwhile, someone is "spinning" the money somewhere. The Pension Fund should have long ago stripped PJSC "Miskyi Komertsiinyi Bank" of its right to pay pensions, transferring pensioners who used it to other banks or the post office. Furthermore, law enforcement, together with the Pension Fund, should have long ago investigated the non-payment or delays of pension payments to the elderly and punished those responsible.
This question is for the National Bank as the regulatory and supervisory body. It's long overdue, even past its prime, to examine the ability of PJSC Mis'kyi Komertsiinyi Bank to fulfill its obligations to repay depositors and interest on them. If the bank is insolvent, it should either be provided with the necessary refinancing so that, under the NBU's supervision, it can repay depositors. Or, if the situation is completely hopeless and PJSC Mis'kyi Komertsiinyi Bank is bankrupt, the State Deposit Guarantee Fund for Individuals should make payments. The sooner this is done, the less the state will have to spend on interest on effectively frozen deposits. As a reminder, according to current legislation, deposits of up to 150 hryvnias in such cases are subject to repayment by the State Deposit Guarantee Fund. Let's not even mention such "trifles" as the National Bank's setting the daily withdrawal limit from one account at 150 hryvnias, rather than 500 hryvnias, as is the case at PJSC "Miskyi Komertsiinyi Bank," which the National Bank should also respond to as a gross violation of regulations.
We emphasize once again that the relevant authorities and the National Bank are obligated to immediately intervene in this situation and put an end to the abuse of clients of PJSC "Miskyi Komertsiinyi Bank." This is especially true since the same or similar "tricks" are likely occurring at other financial institutions.
Alexander Karpets
Publicist, journalist
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