Deposit invalidity

Deposit Guarantee Fund exceeds its authority.

Klimenko Dmitriy, a lawyer and partner at Klimenko & Partners Law Firm, told how the Deposit Guarantee Fund exceeds its authority in the process of withdrawing insolvent banks from the market, which violates the rights of depositors.

Since 2015, more than a dozen thousand deposit agreements of insolvent banks (Delta Bank, Nadra Bank, VAB Bank, Bank Finance and Credit, Bank Mikhailovsky, etc.) were classified as worthless (invalid) by the Deposit Guarantee Fund of individuals. Referring to this invalidity of deposits, the Fund refused to pay the depositor their savings.

The question of the illegality of such actions by the Foundation has been the subject of study in many court cases throughout Ukraine. And judging by the statistics of the outcome of the cases in which the lawyers of our Klimenko and Partners law firm were engaged (and these are several hundred of such cases), then in 95% of cases the contributors won. And the actions of the authorized person of the fund were recognized by the courts as illegal.

One of the main theses in the position of a lawyer and a partner of Klimenko and Partners Law Firm Klimenka Dmitriy was and still is the thesis that Article 38 of the Law “On the Deposit Guarantee System for Individuals”, on the basis of which the Fund considers worthless deposit agreements, cannot be applied to deposit agreements in principle.

After all, the purpose of the activities that are specified by this article and which the Fund or authorized person is entitled to perform is clearly stipulated in this article itself, namely:

(1) – ensuring the safety of bank assets;

(2) – prevention of loss of bank property;

(3) – prevention of bank losses.

It is precisely these goals that limit the powers of the Fund and the authorized person to verify transactions (including contracts) for the detection of insignificant ones among them on the grounds specified in the third part of Article 38 of the Law.

And taking into account the fact that funds attracted on a deposit are liabilities of a bank, and not its assets, that these funds are not bank property and do not affect the bank’s loss, the application of the norms of this article to bank deposit agreements is illegal.

Even the National Bank of Ukraine, in its response to the Delta Depositors Protection Public Organization, confirms that the contribution is the bank’s liabilities.

The impossibility of applying the norms of Article 38 of the Law to deposit agreements is also indicated in part 5 of this article. Indeed, according to its provisions, in the event that a creditor receives a notice from the Fund from a bank about the insignificance of a transaction, such a creditor is obliged to return the property (funds) to the bank, which he received from such a bank, and in case it is impossible to return the property in kind, to refund its value.

A logical question arises, and what funds did the investor receive from the bank at the time of signing the deposit agreement and placing the money in the deposit account? None! Actually, the plaintiff should not return anything to the bank. This Fund must investor to pay a guarantee on the deposit in the amount of up to 200 thousand UAH.

The conclusion suggests itself. The Fund’s authority to identify void agreements does not apply to deposit agreements that have been concluded on ordinary market conditions.

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