In the case of insolvency of a systemically important bank, the NBU has the right to apply to the Cabinet of Ministers of Ukraine with a proposal to participate in the resolution. In such a proposal, the NBU determines the method of resolution and the state's expenses for restoring the bank's financial condition.
If the Cabinet of Ministers accepts the NBU's proposal, the DGF does not search for other investors and acquiring banks and does not hold a tender among them. Instead, the DGF implements the resolution tool which the Cabinet of Ministers has agreed in order to to participate in the resolution.
The state may participate in the resolution (withdrawal from the market) in the following ways:
- purchase by the state ( through the Ministry of Finance of Ukraine) of 100% of the shares of an insolvent bank, as was the case with JSC “Privatbank” and JSC “SENS BANK”;
- creation of a bridge bank by the DGF and its purchase by the state ( through the Ministry of Finance of Ukraine or a state-owned bank);
- transfer of assets and liabilities to a state-owned bank;
Before selling the shares of an insolvent bank to the state, the DGF may be obliged to convert the deposits of the bank's related parties (shareholders, managers, etc.) into shares. If after the conversion the bank's capital still remains negative, the bank is sold to the state for UAH 1.
For the period of martial law, the only possible way to resolve a bank with state participation is for the state to acquire 100% of the insolvent bank's shares. Also, instead of converting liabilities into bank shares and then selling them to the state, a simpler and faster mechanism for improving the financial condition of the bank at the expense of sanctioned persons is used - a simple write-off of the bank's liabilities to such persons to the bank's income.