The operation of Ukio bankas is temporarily suspended, a temporary administrator is appointed
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Announcement from the exchange
The operation of Ukio bankas is temporarily suspended, a temporary
administrator is appointed
Vilnius, Lithuania, 2013-02-12 12:38 CET (GLOBE NEWSWIRE) -- Having assessed
the inspection report, as well as other data gathered for supervision purposes,
and aiming to protect the interests of the general public, depositors and other
customers, the Board of the Bank of Lithuania declared the temporary
restriction of the operation of AB Ukio bankas. A temporary administrator,
appointed by the Board, is authorized to propose decisions that would enable
ensuring of the compliance of obligations to the bank’s clients.
The decision of the Board of the Bank of Lithuania to restrict the bank’s
operation was made after assessing the risky tendencies of Ukio bankas in
recent years, actions of shareholders that were harmful to the bank,
non-compliance with the instructions of the Supervision Service, and the
consequent rising threat to the stable and reliable operation of the Bank. The
decision was approved once it was clear that the other statutory enforcement
measures would not be sufficient in ensuring the security of the interests of
depositors and the general public.
During the inspections of Ukio bankas in December 2012–January 2013 it was
established that the bank performed risky activities, inappropriately assessed
credit risks, in not all cases made sure of the borrower’s possibilities to
fulfil debt obligations, didn’t form enough specific provisions for problem
loans, applied unacceptable methods of portraying transactions in accounting,
and also violated prudential legal acts.
Having assessed the data collected during the inspection, it was established
that, in forming suitable specific provisions for problem loans and properly
evaluating the other assets, the net value of Ukio bankas would be less than
was declared in the reports presented to the Supervision Service, and the bank
wouldn’t perform the prudential requirements related to the capital. In
addition, based on the data presented to the Bank of Lithuania, on 12 February
Ukio bankas no longer complies with the liquidity ratio.
The shareholders of Ukio bankas and the management did not fulfil the loan
restructuring plan, disregarded the Bank of Lithuania’s order to essentially
reduce the part of the loan portfolio related to the main shareholder, or they
only formally complied. Particularly the loans issued to companies related to
the main shareholder make up the largest part of the problem loan portfolio.
Ever after several repeated demands, the Bank of Lithuania did not receive data
that could prove that Ukio bankas’ main shareholders are ready to ensure
reliable management of the bank and had real opportunities to strengthen the
bank’s capital and remove the other deficiencies in the bank’s operation.
The deficiencies in the bank’s operation and violations of legal acts have been
established more than once. However, as was revealed in the information
collected during the last inspection, the earlier requirements set for the bank
to improve the quality of its assets, strengthen the capital base, and curtail
operation risks, were not fulfilled.
Having assessed all the circumstances related to the operation of Ukio bankas,
in observance of the Republic of Lithuania’s Law on Banks and aiming for
stability of the financial system, the Board of the Bank of Lithuania adopted
the decision to announce the restriction of the activities of AB Ukio bankas
and appointed a temporary administrator, Adomas Audickas.
According to the Law on Banks, the administrator has the function of the bank’s
supervisory board, the management and administration. He is authorized to
assess in detail the financial standing of Ukio bankas and carry out adequate
and effective actions to protect the interests of the bank’s depositors and
customers. Taking into account the need to find a solution to the problem as
soon as possible, the administrator is instructed to present to the Bank of
Lithuania his conclusion and proposals no later than six days from the date of
taking the decision.
Temporarily, until it is decided what means will be used to find a solution to
the problems of Ukio bankas, the bank will not be providing financial services.
The Bank of Lithuania stresses that the enforcement measures applied to Ukio
bankas are solely related to this bank only. All other banks operating in
Lithuania and foreign bank branches implement prudential requirements and there
is no risk to their stability. The obligations of Ukio bankas to other banks
and credit unions operating in the country are insignificant.
The Bank of Lithuania
Public Relations Division
+370 5 272 1705