CNB initiates proceedings to revoke Union banka's licence

On 21 February 2003, the Czech National Bank started administrative proceedings to revoke the banking licence of Union banka, a.s. The Bank has been given until 3 March to express its standpoint. The CNB will then reassess the bank's situation and make a decision.

The administrative proceedings were commenced on the basis of the bank's worsened situation in the liquidity area leading to the bank's insolvency and its decision to close its branch network and not to execute interbank payments from 21 February 2003.

Simultaneously with the commencement of the administrative proceedings to revoke the banking licence, the central bank imposed an interim measure on the bank requiring it to acquire liquid assets only, so as not to further worsen the bank's liquidity.

The CNB considers Union banka´s decision to limit its activities under the given circumstances to be rational and responsible vis-a-vis its depositors. Should another solution not be found this interim measure will enable compensation to be paid from the Deposit Insurance Fund as quickly as possible. By law such payments must be made within three months at the latest.

Today, the central bank informed the Deposit Insurance Fund of the bank's inability to meet its statutory and contractual commitments to the entitled persons. The deposits of Union banka´s clients are insured with the Deposit Insurance Fund in compliance with the Act on Banks and to the extent stipulated by this Act. Depositors will get back 90% of their money up to a maximum of euro 25 000.

The start date and manner of payments will be announced to the public by the Deposit Insurance Fund.

Alice Frišaufová
CNB spokesperson