The NBU's decision to liquidate Concord Bank has been deemed unlawful. What’s next? Here’s the lawyers' response.
The appellate court ruled that the decision of the National Bank of Ukraine (NBU) to revoke the banking license and liquidate JSC "AKB "Concord" was unlawful. This ruling has come into legal force; however, due to the shortcomings in Ukrainian legislation, it is impossible to reinstate the bank in the market after the liquidation process has begun. Nevertheless, shareholders may attempt to hold those responsible accountable in the pursuit of justice, although achieving this will be quite challenging. This perspective was shared by the lawyers interviewed by UNN in exclusive comments.
Elena Sosedka, a co-founder of "Concord" bank, shared avideo on her Facebook page stating that the appellate court deemed the decision of the Board of the National Bank of Ukraine to revoke the banking license and liquidate the financial institution on August 1, 2023, to be illegal.
The responsibility for such a decision lies with the members of the NBU's board. However, the lawyers consulted by UNN point out that holding those accountable for the unlawful decision is complicated because it was a collective decision, while legal responsibility should be personal.
"If the decision was made by a collegial body, then you understand that in this situation achieving satisfaction, that is, punishing those who voted collectively, will certainly be difficult," noted former Deputy Attorney General of Ukraine, lawyer Alexey Baganets.
He also added that the owners of "Concord" can demand compensation for the harm caused to them after the court recognized that their bank was unlawfully removed from the market. "The affected party, whose rights and interests were violated, and who suffered material damage, has the right to go to court to seek compensation for the harm caused specifically by the guilty parties," Baganets stated.
Lawyer Alexander Baydik emphasizes that in the case of "Concord," the members of the NBU board who voted for the revocation of the bank's license and its liquidation should be held accountable.
"The members of this collegial body (members of the NBU Board – ed.) should bear responsibility. But I will tell you frankly – holding them accountable will be difficult. Very difficult, if not almost impossible," Baydik remarked.
It is worth noting that the case of "Concord" is not an isolated incident. There have been precedents in Ukraine where banks won lawsuits against the NBU regarding the unlawful revocation of licenses and liquidation. However, according to lawyers, due to the imperfections in Ukrainian legislation, even after the owners of the liquidated banks prove in court that the NBU's decision was unlawful, it is no longer possible to restore the financial institutions to operation. The legislation lacks mechanisms for resuming their activities after the liquidation process has begun. This underscores the necessity for improving the legislation and increasing the accountability of officials for their decisions.
"Indeed, some kind of safeguard should be implemented in the law to have a real opportunity to protect one's rights in court and achieve compensation for the damages caused," emphasized Alexey Baganets.
Reminder
It was previously reported that the shareholders of "Concord" challenged the National Bank of Ukraine's decision to remove the bank from the market in court. The Dnipropetrovsk District Administrative Court ruled the NBU's decision to revoke the license and liquidate "Concord" bank unlawful andcancelled it. This decision was later upheld by the appellate instance.
Despite the war in Ukraine, the process of removing banks from the market has not ceased. Since February 24, 2022, liquidation has been initiated against 8 banks. In 2023, for the first time in Ukraine, not only bankrupt banks but also profitable institutions faced liquidation and license revocation – this includes "Concord" bank. As Elena Sosedka stated, at the time the regulator announced the decision to liquidate the bank, there were sufficient liquid assets in the financial institution to conduct all necessary payments within 2-3 weeks. However, the bank liquidation process is strictly regulated by law and can generally last up to three years.