National Bank of Kazakhstan has cancelled the license of OJSC "Neftekhimbank"

/IRBIS, Apr.21, 00/ - The National Bank of Kazakhstan has distributed a press-release (#14, dated April 20, 2000), where it is said that the license to conduct banking operations issued to OJSC "Neftekhimbank" (Shymkent) was cancelled. The press-release reads that functioning of OJSC "Neftekhimbank" further under current situation is dangerous to the interests of the depositors and lenders of the bank. "In order to stop further spending of the bank resources, that can be used to satisfy the requirements of the depositors (first of all those of private persons) when the bank is liquidated, the National Bank of Kazakhstan has to cancel the license of OJSC "Neftekhimbank" to conduct banking operations", is said in the press-release. The National Bank notes that in the second half of 1999 an essential deterioration in financial situation of the bank was observed, which was caused by the fact that the borrowers of the bank did not pay back the loans of the bank. It had a negative impact on income and solvency, that is the bank's capability to meet its obligations to its depositors. Financial situation of the bank has also worsened because of the conflict between the managing bodies of OJSC "Neftekhimbank", including a litigation over the management of the bank, that took place among the managers of the banks from November 1999 through February 2000. It is said in the press-release that the management of the bank violated the norms set by the National Bank and the requirements of legal acts of the National Bank several times, as well as current legislature that should be obeyed to protect the interests of the depositors. The National Bank has imposed all possible restrictions and sanctions to stabilize the activity of OJSC "Neftekhimbank" and to improve its financial indices, after it found the violations during 1999-2000. These violations, mentioned above, were confirmed after a complex investigation of OJSC "Neftekhimbank" was conducted by the National Bank from January 18 through February 13, 2000. But all the measures taken by the National Bank did not give necessary results. By the decision of the Board of the National Bank of Kazakhstan #19, dated April 2, 2000, in order to improve the bank's activity financially, and to stabilize its work, to minimize the risks associated with functioning of the bank and to protect the interests of its depositors the license was suspended with respect to the reception of deposits from private persons; lending operations (granting loans in monetary terms); warranties (issuing orders, warranties and other commission on behalf of third parties, that is to be fulfilled in monetary terms). Along with that, the National Bank of Kazakhstan recommended the management of OJSC "Neftekhimbank" to conduct the number of measures to improve financial health of the bank, including the work on returning bad debts, cutting administrative expenses and increasing capitalization of the bank while the license is suspended. But financial situation of OJSC "Neftekhimbank" kept worsening and current banking legislature being violated. Based on the opinion, stated in the press-release, there was a threat of complete loss of the solvency of the bank as a result of a decrease in its assets, including cash and property that is needed to make settlements on bank liabilities. Presently, OJSC "Neftekhimbank" is not capable of meeting its obligations, which is confirmed by numerous complaints of legal entities and private persons regarding the repayment of funds deposited in the bank, improperly met contractual obligations on transferring money. Top management of the bank has dismissed itself and for now the bank has no management. The emphasis in the press-release is put on the fact that by preliminary data, the bank has sufficient liquid assets to meet its obligations on the deposits of private persons, that reach KZT170 mln. Interesting fact is that the management of the bank did not even notify Kazakhstan stock exchange (KASE) of the suspension of the license under a number of positions in February, notwithstanding the presence of the shares of the bank in KASE official list of the securities under category "B". Soon KASE intends to discuss the matter on applying delisting procedure to the shares of OJSC "Neftekhimbank".