Meanwhile, the bank shortens personnel countrywide as part of its restructuring intended to help pull it out of its long-term financial crisis
d compensation payments to victims of Nazism through Bank Ukraina, Ukrainian News reported.
According to the resolution, Bank Ukraina must close the account from which it made the payments through a special scheme.
In addition, the bank must pay the WWII victims DM 5 million by the end of this year.
The resolution does not provide a reason for the decision, and Bank Ukraina has declined to comment on it.
In 1996, the Mutual Understanding and Reconciliation Fund, the German government’s agent for carrying out the payments, lost the money in Gradobank when the bank went bankrupt, the report said.
In 1997, the Cabinet reached agreement with the then successful Bank Ukraina on the payment of the lost compensation through money the bank earned independently.
The Cabinet and Bank Ukraina developed a scheme in which Ukraina bought OVDPs, or t-bills, through credits from the National Bank of Ukraine, and used the income to make the compensation payments.
However, in 1998 Bank Ukraina fell into a serious financial crisis that has continued to the present.
The effect of the crisis on payments is not known, as Ukraina has not made their size public during the years of the scheme.
Under pressure from the International Monetary Fund, which was concerned with the losses of one of Ukraine’s largest commercial banks, earlier this summer the National Bank said that it might intervene in Ukraina’s work to stabilize the bank.
In particular, the NBU brought up the possibility of introducing a temporary administration for Bank Ukraina.
However, the decision, which was initially planned for July, was never confirmed.
NBU representatives said that they decided to wait and see how the situation at the bank develops. Due to its agricultural specialization the second half of the year is usually more successful for Bank Ukraina.
In August, the Cabinet created a working group on Bank Ukraina, headed by First Deputy Prime Minister Yury Yekhanurov.
The group is holding active talks with the IMF and the bank itself, but has not made any comments so far.
On Monday, Bank Ukraina announced that it expects to improve its financial results in the fall, based on a fairly successful credit policy this year.
Bank Ukraina finished January-May of this year with losses of around Hr 60 million.
As part of its larger restructuring plan, the bank has also cut 1.5 thousand employees within the framework of the reorganization of its branch network, and plans to reduce a further 1.5 thousand by the end of the year, according to a statement from Bank Ukraina’s press service, the report said.
According to the statement, the process of reducing employees is accompanied by serious structural changes in Ukraina’s management system to improve its quality and effectiveness.
“Now the bank has the possibility to manage financial flows more effectively, reduce expenditures, and significantly improve the utilization of employees’ professional potential,” the statement reads.
It also notes that in six months of this year, the majority of Ukraina’s regional directorships significantly improved their results.
“The central operational department still remains unprofitable. The losses that arose in previous years due to the non-return of credits are concentrated here. If the state settles with the bank for credits provided under government guarantees, which are over Hr 460 million, Bank Ukraina will have a realistic chance to become profitable,” reads the statement.
The bank began the reorganization of its branch network in May of 1999.
The bank transformed all of its balance branches into non-balance branches, and switched to a dual system of management consisting of management-directorships, instead of the earlier three-tiered system of management-directorships-branches.
Bank Ukraina currently includes the central office in Kyiv, 26 directorships, 510 non-balance branches, and over 500 small offices.
