Loans are flowing into the country but not into the economy or banking system to prevent insolvency. What are they for then ?

The article originally appeared at German Economic News. Translated for RI by Anita Zalaldinova

Three Ukrainian banks have been declared insolvent by the Central bank in Kiev. The capital resources of the banks fell below the minimum limit.

The Ukrainian currency experienced a rapid decline in value. Meanwhile, several Ukrainian banks are insolvent (Photo: Reuters)

The Ukrainian Central bank reported on Friday that three more banks were insolvent. Licenses of the VAB Bank, Astra Bank and the City Commerce Bank have been revoked.

The monetary authorities in Kiev reported in a press release that they have met with the management and the owners of the VAB Bank to find a solution but these attempts were unsuccessful because the shareholders had failed to "provide the bank with a proper financial support. The bank was no longer able to fulfil its obligations to its creditors and customers. On November 14 the bank's equity fell to 1.511 million hryvnia. However, the minimum capital may not be less than 120 million hryvnia", said the Central bank. Something similar happened to the other two bankrupt banks.

Furthermore, the Federal Reserve Bank granted a loan of 357 million hryvnia to Credit Dnepr Bank to ensure the liquidity of the financial institution, reports the Central bank in another message. At the end of February monetary authorities supported the Private bank with a liquidity credit equivalent to 62 million euros.

Previously, the Central bank in Kiev had declared three banks insolvent. These include the Delta Bank, Kreditprombank and the Omega Bank. The Omega Bank and Kreditprombank also belong to Delta Bank Group. Since March there has thus been six banks bankruptcies in Ukraine.