Would anyone put their money in a bank which still can’t return deposits?
Despite the billion-dollar financial scandal that has engulfed its former top management, despite its inability to return hundreds of millions of dollars in deposits to its customers, Nadra Bank – under government supervision since Feb. 10 – is still trying to pretend that it’s a normal bank.
Nadra Bank is even offering an 18 percent annual interest rate on deposits. Of course, the money is not guaranteed by the bank whose name means “the depths of the earth” and whose logo includes a floral arrangement. Its motto: “They try harder for me!”
Even the head of Nadra’s press service, Olga Piven, had a hard time spinning the bank’s collapse positively. “What do you think, people are suicidal?” Piven blurted out when asked how many new depositors have entrusted the bank with their money since it came under government receivership.
Nearly 250,000 Nadra Bank customers have $1 billion in deposits, a large share of which they cannot withdraw.
They are people just hoping to get their money back somehow, like Vladimir Sitkin of Kyiv. Every weekday morning, Sitkin and his toddler daughter, Sofiya, make a trip to a Nadra branch to pick up the $15 daily maximum withdrawal that he is allowed since most of his $10,000 deposit remains frozen.
“It’s a madhouse,” Sitkin said. “Sometimes the bank does not have dollars, sometimes they open at noon and sometimes they do not know what the exchange rate is.”
At the end of his first deposit term, Sitkin said the bank allowed him to withdraw only 20 percent of his savings. The bank also forced him to prolong the deposit for another four months, promising to pay off the remaining $8,000 then. He said the bank informed him recently that he might only get 20 percent of the remaining amount when the term expires.
One of Nadra Bank’s managers, who did not want to be identified because of fears of on-the-job retaliation, said she saw no signs of chicanery before February, when the bank came under temporary administration of the National Bank of Ukraine.
“We were prospering; we had great bonuses, great working hours. Practically no one knew the bank president’s name before then,” the manager said. “Now every other staff member calls him a pig.”
On Aug. 11, the NBU – seeking to halt a run on banks – allowed four of the nation’s biggest problem banks, including Nadra, to extend a freeze on deposits until Feb. 10. Angry depositors are waiting to see whether the NBU extends the freeze yet again.
The provisional administrator of the bank, Valentyna Zhukovska, announced in August that clients would be able to withdraw up to Hr 50,000. Clients with deposits of less than Hr 150,000, she said, would be able to withdraw their money in September. Those owed larger amounts would be able to withdraw from 20 to 50 percent of their balance by the end of the year.
So Nadra’s depositors will remain on edge for some time to come.
Some of Nadra’s corporate clients believe that the temporary administration is no more honest than the bank’s previous management.
“My business is on the verge of collapse,” said Maksym Udovichenko, owner of Galaktika insurance company. He was unfortunate enough to deposit his company’s assets, about Hr 1.5 million, with Nadra.
For the past 10 months, Udovichenko has been suffering from Nadra’s arbitrariness. He did not get a penny from the deposits and the bank is still not processing payment transactions, except salaries, he said.
Udovichenko’s company joined the United Independent Committee of Depositors-Creditors (UICDC). He said correspondence between the committee and the bank’s temporary administration has been hot and heavy, but has yielded little progress.
“There are enough facts to start a criminal case,” Udovichenko said.
United Independent Committee of Depositors-Creditors head Ihor Stepanov told the Kyiv Post that temporary administrators are only creating an illusion of cooperation with depositors.
Stepanov said temporary administrator Zhukovska has ignored his attempts to cooperate, but gave her credit for dividing depositors into categories and paying off those with the smallest deposits first.
“People with the smallest deposits are usually the first to protest. People with $100,000 will never protest. By paying out deposits to those who had less, Nadra cut down the first big wave of protests. The temporary administration at the bank has now decided there is no need to cooperate with us anymore,” Stepanov said.
Nadra Bank was once considered a reliable place for four million depositors. It also enjoyed status as the Verkhovna Rada’s official bank under a one-year contract that ended in March.
In a 2008 survey by GfK market-research firm, Nadra was then seen as young, modern, developing and honest with their clients. It was also associated with consumer and car loans.
Before its fall from grace, as recently as Jan. 23, it was lashing out at its main critic, Prime Minister Yulia Tymoshenko.
“Nadra Bank denies all the prime minister’s allegations that the bank is involved in any form of corrupt schemes…”
