A bank that is unable to improve its problem situation by itself is classified as insolvent by the NBU. After that, the DGF appoints a provisional administration to the bank and acquires the right to hold an open tender among interested investors and banks and to conclude relevant agreements with the winner of the tender. However, some banks that have breached financial monitoring requirements or the sanctions regime may be withdrawn from the market without the introduction of a provisional administration (without the possibility of a resolution).
The provisional administration establishes control over the bank, has the powers of the management board, supervisory board and general meeting, and acts to preserve assets and implement the resolution plan.
After the introduction of the provisional administration, the bank still has a valid banking license, but conducts banking activities in a very limited manner. For example, during this period, the bank does not satisfy creditors' claims and does not issue new loans. Information regarding the financial condition of an insolvent institution must still be kept strictly confidential, and bank secrecy requirements regarding the accounts of the bank's customers continue to apply.
During the provisional administration, the DGF cooperates with the NBU, the National Securities and Stock Market Commission and other government agencies to resolve the insolvency of banks in the least costly manner.
The provisional administration usually lasts from 1 to 2 months, but can be completed faster - immediately after the resolution or in case of impossibility of resolution (inability to take control of the bank, lack of interest from potential investors, etc.)