ABOUT THE GROUNDS FOR RECOGNIZING A BANK AS INSOLVENT

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ABOUT THE GROUNDS FOR RECOGNIZING A BANK AS INSOLVENT

Journal Title: «Приватне та публічне право» - Year 2018, Vol 2, Issue

Abstract

The procedure for recognizing a bank insolvent significantly differs significantly from the usual competitive process, first of all, with meaningful procedural relations that are not related to the judicial economic process, but are purely administrative, being in the capacity of the National Bank of Ukraine and the Guarantee Fund for Individuals’ Deposits (hereinafter referred to as the NBU and FGVFO ) in accordance with the laws of Ukraine “On Banks and Banking” and “On the System of Guaranteeing Individual Deposits”. The peculiarity of such recognition is determined, first of all, by material grounds, which have several levels of significance: from those of purely economic value to formally determined legal parameters. It seems that a legal obligation can not be based on the criteria of rationality and efficiency that necessarily arise in case of need to correlate the economic and formal component of a management decision. These are categories of appraisal, which is conditioned so-called “managerial art”, achieved by the level of management of the central bank, which displays the category of management beyond the category of enforcement. Among other things, it should be taken into account that the decision to assign a bank to a problem category is an extraordinary event, which should take into account the circumstances of the systemic nature of the banking institution, the general state of the economic system at a specific moment in the development of society and economy. In this context, the hopes of the authors of the relevant norm for excluding the discretion of the NBU and, accordingly, the elimination of the unequal enforcement of law, can not be justified, since there are almost numerous possibilities for subjective interpretation of certain or other formal criteria of violation of the law by the problem bank as grounds for the application of measures of influence by the NBU. Unlike the bank’s recognition of the problem, which is bank secrecy, the bank’s classification as insolvent destroys banking stability. Such destruction can not be a matter of common sense and the principle of legal wisdom. Therefore, in order to reconcile the economic and legal constituent of the management decision, it is important to amend the Law of Ukraine “On Banks and Banking” in the context of changing the obligation on the right of the NBU to make a decision to classify the bank as insolvent. Thus, the provisions of the legislation of Ukraine on the grounds for recognizing the bank insolvent require a substantial improvement in the direction, first, the narrow grounds for recognizing the bank insolvent only to the level of economically related to the bank’s failure criteria; secondly, the establishment of more flexible terms of financial rehabilitation of banks, which should be determined in an individual rather than normative order; the third time, the transformation of the NBU’s duty to recognize the bank insolvent in the law of this body.

Authors and Affiliations

К. А. ВОЗНЯКОВСЬКА

Keywords

insolvent banks power of NBU divergence of economic and legal categories grounds for bank’s bankruptcy

EP ID EP589527
DOI -
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