Turboatom : The trade union organization of “Ukrenergymachines” applied to the Deposit Guarantee Fund for Individuals

On July 21, 2022, the trade union organization and the labor collective of "Ukrenergymachines" addressed in writing to the Managing Director of the Deposit Guarantee Fund for Individuals Svitlana Rekrut with a request not to send to the National Bank of Ukraine a proposal to revoke the banking license from "Megabank" and liquidate the bank before the expiration date actions of the administration of JSC "Megabank" and wait for the consideration of this issue by the President of Ukraine Volodymyr Zelensky to save the leading machine-building enterprise in Ukraine and Kharkiv region "Ukrenergymachines" JSC.

On July 20, 2022, the Deposit Guarantee Fund announced on its website that the liquidation of the bank was recognized as the only possible way to withdraw "Megabank" from the market and would be started by the fund after the relevant decision of the National Bank of Ukraine was made.

The appeal of the trade union of "Ukrenergymachines" states that the situation with JSC "Megabank" can be resolved in another way, except for liquidation, since this is required by state interests, including the interests of the Joint Stock Company "Ukrainian Energy Machines".

The letter explains the situation regarding the work and concluded contracts of "Ukrenergymachines" and bank guarantees for them:

"Currently the company, which has previously won the international competitive bidding (tenders), financed by the European Bank for Reconstruction and Development (hereinafter - the EBRD) and the European Investment Bank (hereinafter - the EIB), is reconstructing the existing hydroelectric power plants of Ukraine, which are part of the PJSC "Ukrhydroenergo", which, in particular, includes Kaniv HPP, Kyiv PSPP, Dnipro, Kremenchuh, Dniprodzerzhynska, Shidnodniprovska HPP, Dnipro HPP.

One of the main conditions of the tenders is the provision of bank guarantees by each of the participants, in connection with which JSC "Megabank" provided many bank guarantees for the proper execution of contracts - 19,080,000.00 EUR.

The liquidation of the bank will put into question the performance of contracts awarded for EBRD and EIB financing, and, as a result, will lead to a lack of production load."

It is also noted in the application letter that the President of Ukraine is considering an appeal from the trade union organization to resolve issues that have arisen due to many years of fruitful work between "Ukrenergymachines" JSC and JSC "Megabank".

The labor collective and the trade union organization emphasize that under such circumstances it is important not to start the liquidation of the bank, since there is still a period until August 02, 2022 until the end of the temporary administration. This time can be used to save both JSC "Megabank" and the funds and projects of "Ukrenergymachines" JSC", - the letter says.

The letter provides a legal mechanism for resolving the described situation:

The Ministry of Finance of Ukraine can become the owner of JSC "Megabank", which will allow preserving the banking system, and hence the funds of "Ukrainian Energy Machines" JSC and those projects that were implemented jointly with the bank. In the future, the Ministry of Finance sells the bank to an interested investor.

The change of the owner of the bank occurs in three stages.

Three-stage change

Stage I - the Ministry of Finance of Ukraine becomes the owner, as a result of concluding an agreement with the Deposit Guarantee Fund at a cost of 1 UAH.

Stage II - the "bail-in" procedure is carried out - the conversion of obligations of large creditors into bank shares. The bank will be owned by the Ministry of Finance of Ukraine, "Ukrenergymachines" JSC and other creditors

Stage III - the sale by the Ministry of Finance of Ukraine of its share in favor of an investor.

"Ukrenergymachines" JSC is an enterprise where more than 5,000 citizens of Ukraine implement their constitutional right to work.