A group of financial institutions and asset management companies which jointly hold bonds worth $125 million issued by VAB Bank (Kyiv) demand that latest transactions of the bank have been fully investigated in public and propose ways for resolving the current situation.

The relevant letter was sent last week to the Ukrainian president, prime minister, public prosecutor, heads of Interior Ministry, SBU and National Bank of Ukraine (NBU) and beneficiary of VAB Bank Oleh Bakhmatiuk by Clifford Chance LLP law firm, representing the interests of the bond holders.

According to the document, a copy of which has been sent to Interfax-Ukraine, the bond holders pay attention to the fact that at the moment when the bank violated its liabilities on bonds in the third quarter of 2014 the bank increased its credit portfolio from UAH 17.2 billion to UAH 18.9 billion, and then in seven weeks (until November 21, 2014 when the temporary administration was introduced) the portfolio was narrowed to UAH 10.5 billion.

The authors of the letter said that over the said seven weeks deposits of corporate clients in banks liabilities dropped to UAH 483 million from UAH 3.6 billion, while deposits of retail clients fell only from UAH 10.39 billion to UAH 10 billion.

The bond holders want to make sure that the above-mentioned sudden decrease in the amount of credits and deposit are linked to preferential transactions with affiliated entities – Ukrlandfarming, Avangard agro-holdings or Financial Initiative Bank (Kyiv). The NBU earlier informed that the bank carried out many transactions with affiliated entities.

The bond holders expressed alarm that the changes in the indicators were seen in the period when the NBU monitored the operation of the bank and provided state funds to it, including UAH 2.64 billion from June 2014.

The bond holders expect that the NBU and Bakhmatiuk will take all possible measures to pay the debt to creditors in full.

Clifford Chance said that the company had not received responses to the letter as of early morning December 8.

Former Board Chairman of VAB Bank Denys Maltsev told Interfax-Ukraine that the majority shareholder and top managers of the bank fully support the restoration of the cost for the bond holders.

As reported, temporary administration at VAB Bank was introduced from November 21, 2014 to February 20, 2015.

VAB Bank has been operating on the financial market of Ukraine since 1992. Oleh Bakhmatiuk owns an 86.778% stake in the bank.

In terms of total assets as of October 1, 2014 (UAH 23.973 billion) the bank ranked 16th among the 173 Ukrainian banks.