Vladimir Stelmakh
The dispute between the former and current owners of Ukrbank could sink the financial institution.
Thanks to officials from the Deposit Guarantee Fund for Individuals, a conflict between new and existing shareholders of UkrInBank has become public knowledge. This "showdown" could lead to yet another collapse of this rather prominent financial institution. The spectacle promises to be fascinating: powerful administrative resources, represented by "well-fed" officials from the National Bank and high-ranking security officials who retained influence from the Yanukovych regime and are still successfully overseeing the regime's legacy and covering up scams amounting to tens and hundreds of millions, have been brought into the fight for money and control of the financial institution.
A VERBAL IS BETTER THAN THE STORY ITSELF
The parties fighting over the bank will get what they deserve in any case. The old shareholders can regain control of the financial institution or simply destroy it with a series of high-profile scandals and sensational statements. The old owners have nothing to lose: the bank was seized from them several years ago for a symbolic 4 hryvnias by the former head of the National Bank himself. Vladimir Stelmakh with the active support of the Deputy Head of the SBU, Nikolai Gerasimenko.
Both of these individuals are current shareholders of Ukrinbank. Stelmakh, thanks to his experience and authority, is the main "fixer" of all controversial issues at the NBU. Gerasimenko provides security cover and "deals with" those who disagree with the new shareholders' policies; some are even forced to flee abroad from Ukrinbank's security "protection."
A major scandal has now erupted around the bank, long known as one of the so-called "family's" cash desks: the insolvent institution is defrauding its market peers, has somehow secured refinancing from the NBU in amounts exceeding its capital, and depositors are complaining about it. But the bank is somehow staying afloat with the active support of NBU officials and law enforcement agencies.
FROM A SPARK IT IGNITED…
The catalyst for the scandal, which brought the secret disputes between former and current shareholders into the public domain, was a document leaked to the media by officials of the Deposit Guarantee Fund. The essence of the document is that Ukrinbank refuses to fulfill the terms of a repo agreement with Fidobank and return its securities. The letter, sent to the NBU and the Deposit Guarantee Fund, alleges that Ukrinbank is failing to fulfill its obligations to other banks, specifically, failing to repay interbank loans. On this basis, the bankers are asking the regulator to declare Ukrinbank problematic, which would lead to increased oversight of its operations.
But this scandal is actually just the tip of the iceberg. Ukrinbank's insolvency problems are nothing new to anyone in the financial market. Bankers, aware of the bank's situation, have long since closed credit lines to Ukrinbank. "In recent years, the bank has survived thanks to strong administrative support: initially, its patrons were members of the 'family,' who ensured immunity and provided resources; to this day, the bank is still backed by security officials and high-ranking NBU officials," said a bank treasurer on condition of anonymity. "Everyone understands that if this administrative component is removed, the bank won't survive for long. Now, people simply prefer not to deal with Ukrinbank: it has a powerful lobby in the security forces, and officials at the NBU are 'well-fed,' or simply loyal to Stelmakh personally. Therefore, even litigation would be futile. Right now, no one will give it money except the NBU."
In recent months, complaints have been increasingly appearing on depositor forums that the bank is returning deposits with difficulty.
Ukrinbank has been heavily dependent on refinancing from the National Bank for nearly two years. While previously refinancing information was only occasionally leaked to the press, it is now published regularly. Ukrinbank is a regular recipient of funds from the regulator. From January 2014 to the end of February 2015, the financial institution received refinancing from the NBU totaling over UAH 672 million—an amount significantly exceeding the bank's capital, which is just over UAH 500 million. In March 2015, the NBU provided the bank with UAH 73 million, and in April of this year, the financial institution received two refinancings from the regulator totaling approximately UAH 16 million.
The National Bank's supervisory department is well aware of the situation and says it has repeatedly submitted relevant recommendations to the NBU's management. Shortly before the May holidays, information leaked to the media that a special meeting of the National Bank was being prepared, which could decide to designate UkrInBank as "problematic," which would mean tightening external oversight of the bank and its operations. However, as NBU supervisors explained, the initiative to hold such a meeting was nixed by the NBU's top officials: the meeting was postponed indefinitely under the auspicious pretext of the May holidays.
SCAMMER HABITS
The current securities scandal only demonstrates the powerful administrative support Ukrinbank still enjoys. Long before the Maidan and the revolution, it was common knowledge that this financial institution was one of the many "family cash offices." This is amply demonstrated by the transactions involving billions of Ukravtodor funds through shell companies. The regime didn't trust just anyone with such funds and didn't allow "outsiders" within a cannon shot.
In recent official statements, the bank regularly boasts of its "dismal" balance sheet performance, supposedly demonstrating Ukrinbank's exceptional reliability. However, the same story was true of all the "family-run slush funds," some of which were liquidated by the National Bank in recent months for financial fraud. Stelmakh's old connections continue to help the bank not only stay afloat but also cheat fellow bankers with complete impunity through years of honed corruption and administrative schemes.
The current "debt scandal" between the two banks contains piquant details that clearly indicate the self-interest of NBU officials, who are covering up the actions of Ukrinbank's owners and management. The subtlety lies in the fact that Ukrinbank received dollar-denominated government bonds from Fidobank last summer through a repo transaction. Over the past year, thanks to the hryvnia's twofold devaluation, the value of this stake has doubled: the nominal value of the government bonds is just over $4 million. Therefore, it is unprofitable for Ukrinbank to sell the stake to Fidobank for UAH 48 million, which, at the current dollar exchange rate, is already worth over UAH 80 million.
From a legal standpoint, the scheme is flawless: the foreign currency government securities that Ukrinbank is obligated to sell under a repurchase agreement with Fido Bank in hryvnia at a rate inconsistent with current realities are pledged to the National Bank for refinancing. Thus, Ukrinbank effectively "hid" the securities from Fidobank's claims. Sources at the NBU familiar with the situation say that senior officials at the banking regulator were involved. One of Ukrinbank's co-owners, former head of the National Bank Volodymyr Stelmakh, is personally "persuading" NBU officials. As is well known, while still head of the NBU, he and the current head of its supervisory board, Volodymyr Klymenko, seized Ukrinbank from its previous owners for 4 hryvnias. After the securities scandal became public, Stelmakh is once again going to the NBU as if it were his job.
SHAREHOLDERS START, DEPOSITORS LOSE
While the court proceedings are ongoing, the disputed bonds that sparked the scandal are still nominally held in Ukrinbank's accounts, albeit "hidden" as collateral with the National Bank. Therefore, at the maturity date, which is May 27 of this year, the funds will be deposited into Ukrinbank's account. According to the repurchase agreement with Fido Bank, Ukrinbank was supposed to sell the securities for UAH 48 million on April 15 of this year. According to a letter to the NBU and the Deposit Guarantee Fund, Fido Bank reserved this money in an account at the Perspektiva exchange, where it has remained "stuck" due to Ukrinbank's failure to fulfill its obligations.
If the NBU's management continues to turn a blind eye to the conflict, Ukrinbank will receive approximately 84 million hryvnias upon redemption of its government bonds, instead of 48 million hryvnias if it had complied with the terms of the agreement. Even if the court orders Ukrinbank to fulfill the terms of its agreement with Fido Bank, the net cost of such a scam will be approximately 40 million hryvnias, pocketed by Ukrinbank's owners Stelmakh-Klymenko-Gerasimenko, as well as the compliant officials from the National Bank and the Security Service of Ukraine (SBU), who are providing cover for the scam.
In any case, no matter how the scandal surrounding UkrInBank ends, the money has already been effectively stolen with the active assistance of the National Bank and law enforcement agencies. The only question now is whose pockets it will end up in. Millionaires and officials won't be the losers—that's a fact. As usual, the only losses will be suffered by the troubled bank's depositors, for whom the printing press will have to be reactivated if the regulator continues to turn a blind eye to the bank's obvious problems.
Based on materials from: Kraina.name
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