Before going to the bank, each person studies in detail reviews about him. Terra Bank is one of the Ukrainian financial institutions that has recently attracted the attention of depositors. Today, like many other similar institutions, the company is experiencing some difficulties, and frankly, is on the verge of bankruptcy.
Back to the past
Positive reviews, of which Terra Bank was very common, filled the Internet at a time when the financial institution was 16th in the NBU rating and included in the third group of financial institutions. The authorized capital of the bank was equal to 557,141 thousand hryvnias. For the last successful reporting period, the financial institution showed profitability in the amount of UAH 1 107 892. Net interest income amounted to 71 787 hryvnia. According to the classics of the genre, today an interim administration has already been introduced in such an institution as Terra Bank. The institution was the 16th on the list, in relation to which the state took drastic measures. It is worth saying that over the past 4 years, four owners of the organization have changed. The last two owners used the financial institution solely for the purpose of withdrawing money, which was attracted from depositors at incredibly high interest rates.
Everything is changing
The previously successful and prosperous Terra Bank (Kiev), which in July 2014 was no longer 16th but 42nd in the NBU rating, was already declared insolvent on August 22. After that, the Deposit Guarantee Fund decided to introduce a temporary administration into the institution for a period of three months. In the same period, an active search for investors began. Such actions were the result of a huge flurry of negative customer reviews. People actively wrote lawsuits against a financial institution and complained to various authorities about the fact that the bank grossly violates the law and does not fulfill its obligations to depositors.
Change of leadership is the first step towards instability
After the interim administration was introduced in an institution such as Terra Bank, a long and very fascinating story of a change of owners became available to the public. Initially, the financial institution was known as Invest-Kryvbass Bank, established in 1995 on the territory of Krivoy Rog. A decade later, in 2005, the institution received a new name - Invest-Credit Bank. And only in 2007 , a financial institution appeared before the public in the form in which it knows it today. The last name change was initiated by its new owner, who turned out to be Kolobov, director of the Oschadbank treasury, and Prikhodko and Davidenko worked with him. The position of chairman of the board went to Sergei Shcherbina. According to him, the founders initially did not have a development strategy for a financial institution for the future. They just wanted to bring the institution to the general Ukrainian level with a view to its further sale. Active development of the enterprise was carried out without joint stock assets, exclusively at the expense of profit.
Why so many dissatisfied investors?
Negative reviews, in which Terra Bank appeared as an institution that does not fulfill its obligations, poured from all sides. Why does a financial institution have so many customers if it was initially focused on servicing only enterprises from Krivoy Rog? The situation is explained by the fact that already in 2007 the enterprise was moved to Kiev, its branches were opened in such cities as Dnepropetrovsk and Odessa, Kherson and Lviv, among others. In total, there were about 21 branches. The first attempt to sell an already rapidly developing network was made in 2009. Adjustments to the plans introduced the global crisis of 2008. The sale transaction took place only in 2010. The change of leadership was accompanied by the active prosperity of the institution. Thanks to Kirill Shevchenko and Vadim Kopylov, the assets of the institute grew to 1.4 billion hryvnias. At the beginning of 2012, the capital of the institution was equal to 2.9 billion hryvnia. Nothing testified that in the next few years there will be reports that Terra Bank is not returning the deposit.
Double resale
The positive scenario for the development of the enterprise did not last long. Already in 2012 and in 2013, the bank was resold twice. The dark story is connected with Tsyplakov, one of the last owners of the institution. Financial stability was compromised when the institution issued a loan to one of the businessman’s enterprises in the amount of 40 million. There were rumors that the financing of the business was carried out at the expense of investors. The debt has not been paid; it is most likely that the owner of the bank himself has forgiven himself. Over the past months of the bank’s active work, it has attracted depositors by all means, offering them a deposit at a rate of 26.5%, which is much more than the average rate on the market. When the time of partnership with depositors expired, Terra Bank refused to issue deposits.
Avalanche of Negative Reviews
Information about the refusals spread very quickly in society, and people rushed to terminate the contract and withdraw their money. The result was an outflow of capital. A huge number of dissatisfied depositors is also due to the fact that Terra Bank, whose problems began only a year ago, has established partnerships with the National Aviation University. According to preliminary estimates, 45 million hryvnias were in customer accounts attracted from this segment. By the time the accounts were completely frozen, they left an amount of 2.5 million hryvnias.
The first problems and attempts to save a sinking ship
When negative reviews fell on the financial institution from all sides, Terra Bank took a very interesting position, which clearly indicated that the management was trying to withdraw money by all possible means. In parallel with the active advertising of super-profitable deposits, right up to the moment of introduction of the interim administration and already when working as part of the establishment of a curator with the NBU, active lending to enterprises was carried out. A powerful increase in the loan portfolio was carried out at the expense of small investors. It is worth saying that loans in the amount of several hundred million dollars were received by companies with registered capital in the range of one hundred thousand hryvnias. The appropriateness of their financing could easily be called into question. To say more, such bank customers as VVS-Factoring and Trajectory, Best Course, and many others, not only did not have collateral in the amount of loans issued, they did not have directions in which to provide money . When the home of a large institute was Krivoy Rog, Terra Bank showed great promise. Today it has turned into a money laundering tool, although it has not been officially proved to be possible.
What was hiding from the public?
According to official sources, the first difficulties in the bank were recorded back in 2013. During this period, the operating loss was about 22 million hryvnias per month. It is strange that at the end of the year the total profit of the enterprise amounted to 1.7 million hryvnias. The problem is that financial institution reporting was far from reality. In April, the National Bank of Ukraine made an investment in Terra Bank, the exchange rate of which favorably differed from the offers of competitors. The volume of refinancing amounted to about 77 million hryvnia. At the same time, the bank tried all the time before the introduction of the interim administration to pay the debt to the state. Even before the introduction of the administration, the management staff was completely reconstructed. Almost all board members were fired. Attempts to sell a financial institution during the crisis were unsuccessful.
What should I do?
The main cause of the bank’s problems is the issuance of illiquid loans to affiliated companies. According to the dismissed bank manager, of the 320 million provided in loans, only 80 are repayable. You can simply forget about the rest. It is also interesting that the credited companies disappeared altogether. Many do not even have their own resources on the Internet. There are simply no registered offices listed during paperwork. And some companies even turned out to be registered at the same address. Thoughtful scheme of fraud on the face. The NBU, in order to somehow eliminate customer deposits, must take active measures. Here we are talking about the recognition of transactions invalid due to exceeding the credit limit or due to the lack of sufficient security for the lending enterprises. The IMF and the interim administration should work closely to resolve the issue of investor compensation.
Will Crystalbank correct the situation?
After a detailed study of the situation, it was decided to create a transitional financial institution, Crystal Bank, which in the future should eliminate all the failures of the leadership of Terra Bank. The project is being implemented under the auspices of the Fund for Guaranteed Deposits of Individuals, which gives investors some hope for the return of their funds. About 1.522 million hryvnias were contributed to the authorized capital of the Transitional Institute of the Federal State Financial Fund for compensation of damage to depositors. This amount should already be fully refunded in 2015. This project is relatively new for Ukraine and its further fate is in question. It is only known for certain that the majority of depositors actively receive their payments, albeit outside the time limit. The active prosperity of the innovative financial institution will guarantee that all obligations to all individuals will be fulfilled by the end of 2015. In general, the FGVFL provides support to approximately 50 banks, so a sufficiently large percentage of depositors have a chance to regain their savings.