Metropolitní spořitelní družstvo prohibited from accepting deposits under a CNB measure

As a preliminary measure, the Czech National Bank has prohibited Metropolitní spořitelní družstvo (MSD) from accepting deposits and providing loans. This prohibition does not apply to accepting repayments of existing loans, so the CNB’s preliminary measure in no way affects the returns on the credit union’s lending transactions.

“Following a thorough assessment of the situation, and taking into account the seriousness of the shortcomings detected in the credit union’s business, the CNB decided it had to prohibit or restrict the performance of these activities by the credit union. Above all, this means that members cannot deposit money with the union,” said CNB spokesman Marek Petruš.

“The CNB made this decision to protect the deposits of the union’s members,” said Mr Petruš. The CNB is not authorised to provide more detailed information until the administrative proceeding against the credit union is concluded with a final decision.

The prohibition against accepting deposits does not apply to payments made by members in repayment of obligations under credit agreements. MSD members should therefore avoid falling into arrears on existing loans.

“The funds on selected MSD accounts on which payments have de facto been blocked have not been blocked on the basis of the CNB’s decision, so the CNB is not authorised or able to provide any information on this matter,” added Mr Petruš.

Answers to frequently asked questions (available in Czech only) about credit unions are available on the CNB’s website at www.cnb.cz.

Marek Petruš
CNB spokesman

Additional information:
In a preliminary measure of 7 May 2013, the CNB imposed on Metropolitní spořitelní družstvo a prohibition against accepting deposits from its members, a prohibition against providing loans to its members and a prohibition against acquiring (purchasing) assets with a risk weight higher than 0% (a 0% risk weight) pursuant to Annex 4 of Decree No. 123/2007 Coll., on prudential rules for banks, credit unions and investment firms, as amended, with the exception of assets necessary to ensure day-to-day operations and with the exception of making deposits with banks pursuant to Article 1(1) of Act No. 21/1992 Coll., on Banks, as amended, and with banks having their registered offices in member states of the European Union.

The Czech National Bank is the central bank of the Czech Republic and the supervisor of the Czech financial market. The primary objective of the CNB is to maintain price stability. The CNB sets monetary policy, issues banknotes and coins and manages the circulation of currency, the payment system and settlements between banks. It also performs supervision of the banking sector, the capital market, the insurance industry, pension funds, credit unions, electronic money institutions and consumer protection, as well as foreign exchange supervision. The CNB has offices in Prague, Plzeň, Hradec Králové, Brno, Ostrava, České Budějovice and Ústí nad Labem.