While Smart Holding is trying to reverse the decision on the liquidation of Forum Bank, it is not offering a rescue plan

Photo: Konstantin Melnitsky

The District Administrative Court of Kyiv has satisfied the claim of Yernamio Consulting LTD, the majority shareholder of Forum Bank, on deeming the results of the tender for the sale of this financial institution null and void. There were two preliminary hearings on the case with the participation of the claimant, bank clients and representatives of the Deposit Guarantee Fund of Ukraine (DGFU) and the National Bank of Ukraine. Yernamio Consulting LTD, a part of Smart Holding, appealed to the court in order to prove that the bank’s rescue program proposed by the former owners of Forum Bank was rejected without solid grounds and that the parties should return to the tender for the sale of the financial institution. The NBU is aware of the court’s ruling, but has not received the documents yet, reported the NBU’s press service on June 27.

Competitive selection

Smart Holding owner Vadym Novynskiy has already attempted to regain control of Forum Bank. At the end of May, the businessman proposed to create a so-called transition bank: the clients were offered to exchange their deposits into the shares of the new financial institution and transfer foreign currency deposits into hryvnia savings accounts. The bank’s clients rejected this initiative. As a result, the DGFU turned down the company’s proposal to create such a financial institution. Yernamio Consulting decided it is not interested in buying the bank and withdrew its bid on May 20.

Since the winner of the tender was not determined, the DGFU set the next tender for the sale of the bank’s assets and liabilities. The plan was to sell the portfolio at up to 80% discount, informed Deputy Chair of the Depositors and Client’s Initiative Group of Forum Bank Anton Katin.

Alfa Bank (Ukraine) was ready to acquire the bank’s portfolio. The potential buyer even submitted a letter of suspension with conditions of acquisition. Among other things, Alfa Bank (Ukraine) expected to receive a large amount of refinancing, says Katin. These conditions were not approved by the NBU and DGFU. On June 13, the regulator revoked the license of Forum Bank and announced liquidation of the financial institution.

In its turn, this decision did not satisfy Novynskiy: he announced that the decision would be contested in court. “We involved clients in the negotiations, transferred US $50 mn to the special account of the NBU in order to prove the serious nature of our intentions to become an investor to salvage Forum. In September, we were preparing to transfer another tranche in the amount of US $60 mn,” said Novynskiy. However, as a source at the bank told Capital, the companies linked to Smart Holding stopped servicing their debts to the financial institution back in March after the introduction of a provisional administration at the bank. This is about 29 loans of companies linked to structures of Novynskiy in the amount of UAH 2.18 bn.

As of June 11, their debt on interest payments amounted to UAH 102 mn. Officially, Smart Holding claims the amount is much lower. At that, the company does not deny that it suspended servicing debts. For instance, the DGFU is trying to adjudge US $16.5 mn from Novynskiy’s company Yudzhin LLC. The company received a loan for the construction of Troyitska Square in Kyiv, when both the bank and the company were under Novynskiy’s influence. The company stopped servicing loans after a provisional administration at the bank was created.

Chain reaction

On June 27, the day following the first ruling of the court, Yernamio Consulting filed the next claim to the court on deeming the decision of the NBU to revoke Forum Bank’s license unqualified. “These are the links of the legal chain of contestation,” explains Katin. “The court hearing on the third claim of the company is scheduled for July 9.” Novynskiy’s final goal is cancelation of the decision on the liquidation of Forum Bank and a return to the tender for its sale as an insolvent bank. PR Director of Smart Holding Yevheniy Zahorulko says the company was always against the liquidation of Forum Bank.

Trials can go on from six to twelve months. CEO of Khreshchatyk Bank Dmytro Hrydzhuk believes there will be no hope for revival of the bank in a year as the client’s trust in it will be lost completely.