On 26th of March 2018, the European Central Bank, as proposed by Finantsinspektsioon, withdrew the authorisation of Versobank AS to operate as a credit institution. The authorisation was withdrawn due to serious and long-lasting breaches of legal requirements, particularly concerning the prevention of money laundering and combating the financing of terrorism.
In parallel, following the decision of Finantsinspektsioon from 26th of March 2018, all transactions and operations of Versobank AS and all payouts to depositors and other creditors are immediately suspended. Finantsinspektsioon also cancelled the identification code of Versobank AS, informed the Guarantee Fund about the withdrawal of the authorisation, and filed an application to the court for compulsory dissolution and the appointment of liquidators. The Supervisory Board of the Guarantee Fund will meet on the morning of Tuesday 27th of March to discuss conditions for the compensation of deposits in Versobank AS.
The Financial Supervision Authority ascertained during on-site inspections carried out in 2015-2017 that Versobank AS had breached anti-money laundering and combating the financing of terrorism legislation, and also requirements concerning provision of services in other member states of the European Union. The breaches were systemic and long-lasting, and the bank did not fully eliminate them even after the intervention of Finantsinspektsioon.
Finantsinspektsioon initiated the withdrawal procedure after Versobank AS had failed to eliminate the breaches of legislation over a considerable timeframe, neglected to deal in a timely manner with issues uncovered by on-site inspections, and did not comply Finantsinspektsioon’s precept to the extent required. Finantsinspektsioon submitted an official application to the European Central Bank to withdraw the authorisation of Versobank AS on 8th of February 2018. The European Central Bank decided to withdraw the authorisation on 26th of March 2018. The legal basis for the withdrawal of the authorisation is § 17 (1) clauses 2, 5, 12, 14 and 15 of the Credit Institutions Act.
“As financial intermediaries are one of the first and most important lines of defence combating money laundering and terrorist financing, we cannot tolerate any breaches of the law by them. The withdrawal of the authorisation of Versobank AS is a clear signal that Estonia will not tolerate breaches of anti-money laundering and combating of terrorism law”, said Kilvar Kessler, chairman of the board of Finantsinspektsioon.
He confirmed that the withdrawal of Versobank AS’ authorisation is an isolated case and does not concern any other credit institutions operating in Estonia. The Estonian financial system as a whole is in a very good state, and financial intermediaries are well capitalised and operate on solid foundations. “Versobank AS has 5600 clients, of whom only 2000 are residents of Estonia, and it is one of the smallest credit institutions operating in the Estonian market, meaning that its closure will not have any negative impact on the future operation of the Estonian financial system. For this reason, the resolution procedure of the bank will not be initiated. Versobank AS has sufficient funds to cover the claims of depositors”, said Mr Kessler.
The withdrawal of the authorisation to operate as a credit institution will be followed by the compulsory dissolution of Versobank AS following the court order of Harju County Court. The court will appoint liquidators, who will take over the management of the bank as set out by law, determine its assets, contact the customers of the bank and start settling the legitimate claims of creditors.
Tel: 6680 570
Information line for compensation of deposits:
Tel: 6680 580