Deutsche Bank disconnected the accounts of Ukrainian clients

Deutsche Bank disconnected the accounts of Ukrainian clients

The decision by Deutsche Bank Trust Company Americas to disconnect the accounts of Ukrainian clients puts the country’s banking system at risk. 

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"The disconnection of Deutsche Bank accounts was unprecedentedly unexpected for us. Since we are a bank fully immersed in the transactional business, this is critically important for us. The clearing function of the bank is fundamental, and its limitation can harm the bank’s activities. We experienced some delays as we needed to reorient clients, and there were delays in the crediting of export proceeds. But the main issue is that we don’t see this problem receiving the necessary response from society," said the chairwoman of the board of Avangard Bank, Svitlana Korchynska.

According to her, about 60 banks without direct correspondent accounts have suffered from Deutsche Bank’s decision.

"This could lead to clients of these banks with foreign economic contracts being forced to transfer to large banks. This is another redistribution of the market, and probably there will be an increase in commissions. If at any time The Bank of New York makes a similar decision, the entire system will stop. This is becoming a national security issue," she stated. In March, Deutsche Bank announced that it would disconnect the correspondent accounts of Ukrainian banks that do not have direct correspondent accounts with foreign banks.

In turn, the chairman of the board of Globus Bank, Serhiy Mamedov, highlighted a possible solution to the situation by amending NBU Resolution No. 118. "There is a proposal to change the necessity for Ukrainian banks to open correspondent accounts not only in countries of the 1st group, but also in others. So that banks can open correspondent accounts in countries like Turkey and China. This would solve the problem in the short term," said Mamedov.

According to Olena Sosyedka, chairwoman of Concord Bank’s supervisory board, the best solution to the situation would be if the NBU took over the clearing function.

The chairman of the board of Vernum Bank, Oleksandr Sobolyev, noted that the NBU could help many Ukrainian banks by confirming their compliance with financial monitoring requirements.

"The experience of the Baltic countries shows that coordination of joint efforts is possible and applicable for us. Actions could be coordinated, an audit of financial monitoring rules conducted, and shown to European and American counterparts that our banks are complying with all requirements," said the banker.

Meanwhile, the National Bank believes that the problem is not widespread since only 8% of all export-import contracts went through the "affected" banks. Additionally, the NBU is developing the possibility of assigning the clearing bank function to one of the large banks.

In March, Deutsche Bank announced that it would disconnect the correspondent accounts of Ukrainian banks that do not have direct correspondent accounts with foreign banks.