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The information for parties related to JSC "PUMB"

What does the term “bank related party” mean?

According to Article 52 of the Law of Ukraine “On Banks and Banking Activities”, parties related to the bank are:

  1. Bank controllers;
  2. Persons who have significant participation in the bank and persons through whom these persons exercise indirect ownership of substantial participation in the bank;
  3. Heads of the bank, head of the internal audit department, chief risk manager, chief compliance manager, heads and members of committees of the bank's council and the bank's board;
  4. Relatives and affiliates of the bank, including members of the banking group;
  5. Owners of significant participation in related and affiliated persons of the bank;
  6. Heads of legal entities and heads of banks that are related and affiliated persons of the bank; the head of the internal audit service; the leaders and members of the committees of these persons;
  7. Associated persons* of individuals specified in clauses 1-6;
  8. Legal entities in which the individuals specified above are heads or owners of substantial participation;
  9. Any person through whom the operation is carried out in the interests of the persons specified in this part.

*Associates – husband or wife, direct relatives of this party (father, mother, children, siblings, grandfather, grandmother, grandchildren), direct relatives of the husband or wife of that party, husband or wife of a direct relative.

*An affiliate of a bank is any legal entity in which the bank has substantial participation or which has a substantial participation in the bank.

*A relative person – a legal entity having owners of substantial participation in common with the bank.

The consequences of concluding a contract on non-market conditions

Transactions with party related to the bank cannot provide for conditions that are not current market conditions.

Current market conditions are not considered, in particular:

  1. acceptance of less security for performance of obligations than is required from other customers;
  2. acquisition of property of low quality or at an inflated price from a person related to the bank;
  3. making an investment in the securities of a person related to the bank that the bank would not have made in another company;
  4. payment for goods and services of a person connected with the bank at prices higher than usual, or in such circumstances when the same goods and services of another person would not have been purchased at all;
  5. sale of property to a person related to the bank at a value lower than that which the bank would receive from the sale of such property to another person;
  6. accrual of interest and commissions on services provided by the bank to persons related to the bank, which are less than usual;
  7. accrual of interest on deposits attracted by the bank from persons related to the bank, which are more than ordinary;
  8. transfer of property for use to a person related to the bank, the fee for which is lower than that which the bank would receive from a person not related, or receipt of property from a person related to the bank for use at an inflated fee.

Agreements concluded by the bank with persons related to the bank on terms that are not current market conditions are invalidated from the moment of their conclusion (Article 52 of the Law of Ukraine "On Banks and Banking Activities").

In the event of the invalidity of the deal, each of the parties is obliged to return to the other party in-kind everything that it received for the execution of this deal, and if such a return is impossible, in particular, when the received is in the use of property, the work performed, the service provided, reimburse the cost of that what was received at prices existing at the time of compensation (Article 216 of the Civil Code of Ukraine).

Restrictions for the bank on operations with related parties

The bank is prohibited from providing loans to any person for:

  1. repayment by this person of any obligations to a person related to the bank;
  2. acquisition of assets of a person related to the bank, with the exception of products manufactured by this person;
  3. purchase of securities placed or signed by a person related to the bank or the rights to which a person related to the bank has.

The National Bank of Ukraine exercises control over the operations of banks with parties related to the bank.

The National Bank of Ukraine has the right to establish restrictions on the operations of banks with parties related to the bank.

Negative consequences for a party, related to a bank which arise when classifying the bank as insolvent and withdrawing such bank from the market in accordance with the Law of Ukraine “On the system of guaranteeing deposits of individuals”

According to par. 4 and par. 7 of the fourth part of Article 26 of the Law, the Fund does not reimburse funds for a deposit in the guaranteed amount of compensation (now 200,000.00 hryvnias) from the Fund: 

  • placed on a deposit of the bank by a party who is a party related to the bank or was such a party during the year before the day the National Bank decided to classify such a bank as insolvent (in the event that the National Bank makes a decision to revoke the banking license and liquidate the bank on the grounds specified in part two of Article 77 of the Law of Ukraine “On Banks and Banking Activities”, within a year before the day such a decision is made);
  • on bank deposits, on which depositors in accordance with an individual basis receive interest from the bank under contracts concluded on conditions that are not current market conditions in accordance with Article 52 of the Law of Ukraine “On Banks and Banking Activities”, or have other financial privileges from the bank.
Answers to the questions that you may have if you receive a notification from the Bank that you are identified as a party related to the Bank

Do I need to contact the Bank if I have received a notification letter identifying me as a party related to the Bank?

  • No, contacting the Bank is not required. A letter has been sent to you informatively in compliance with the requirements of the National Bank of Ukraine. 

Why did I receive a letter regarding my identification as a party related to the Bank, if I am not a customer of the Bank and do not have any business relations with the Bank?

  • You have received a letter because you meet the criteria for determining parties associated with the Bank established by the Law of Ukraine “On Banks and Banking Activities”.

Can I, after determining me as a party related to the Bank, receive the services of the Bank?

  • The status of a party related to the Bank does not restrict the use of the Bank's services if the Bank provides services on current market conditions
Responsibility of parties related to the bank

According to Part 5 of Art. 58 of the Law of Ukraine “On Banks and Banking Activities”, a party related to the bank for violation of the requirements of the law, including regulatory legal acts of the National Bank, the implementation of risky operations that threaten the interests of depositors or other creditors of the bank, or bringing the bank to insolvency, bears civil, administrative and criminal liability.

A party related to the bank whose actions or omissions led to damage to the bank through his fault is liable with his property. If, as a result of actions or inaction of a party related to the bank, the damage is caused to the bank, and another party connected with the bank receives property benefits directly or indirectly as a result of such actions or inaction, such parties shall be jointly and severally liable for damage caused to the bank.

Article 1665 of the Code of Ukraine on Administrative Offenses and article 73 of the Law of Ukraine “On Banks and Banking Activities” for violation by the bank-related parties of the banking, currency legislation, legislation governing the transfer of funds in Ukraine, regulatory legal acts of the National Bank of Ukraine or the implementation of risky operations that threaten the interests of depositors or other creditors of the bank provides for a fine, according to the violation.

Article 2181 of the Criminal Code of Ukraine when bringing a bank to insolvency, that is, intentionally, for personal gain, other personal interest or in the interests of third parties, the performance of any actions related to the bank, which led to the classification of the bank as insolvent, if it caused great material damage* to the state or the creditor, provides for punishment by restraint of liberty for a term of one to five years, or imprisonment for the same term, with a fine of five thousand to ten thousand non-taxable minimum incomes of citizens and the deprivation of the right to hold certain posts or engage in certain activities for up to three years.

*material damage is considered large if it is ten thousand or more times the non-taxable minimum income of citizens.

 

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