OREANDA-NEWS. August 19, 2010. OTP Bank, UkrSibbank, Ukrsotsbank fulfilled all the recommendations of the Antimonopoly Committee of Ukraine regarding work with insurance companies within the prescribed time limits, reported the press-centre of UkrSibbank.

Domestic media have reported on a non-compliance case and initiation by the Antimonopoly Committee of Ukraine of legal proceedings in respect of UkrSibbank, Ukrsotsbank and OTP Bank in connection with "imposing by said financial institutions of certain insurance companies services on their customers."

In this regard, OTP Bank, UkrSibbank, and Ukrsotsbank would like to state that, by July 28, 2010, the Banks have fully complied with all recommendations of the Antimonopoly Committee dated April 29, 2010, in particular, informed the insurance companies and borrowers of the qualification requirements set up by the Banks to ICs and insurance contracts. Relevant information is posted on corporate websites of the Banks and is available to any customer or insurance company.

The Banks exclude the possibility of unjustified refusal to verify any insurance company for its compliance with public requirements laid down to insurance companies and their products.

The Banks were surprised to find about institution of legal proceedings by the Antimonopoly Committee. Both before implementation of the mentioned recommendations, and at present, the Bank were and are publicly informing customers of the list of insurance companies with which the customers may at their own discretion conclude insurance contracts on the property provided to the Banks as collateral. Within preliminary consultations with the ACU regarding work with insurance companies as of April 29, 2010 (Recommendations of the Antimonopoly Committee of Ukraine "On measures to prevent violations of the Laws on Protection of Economic Competition), the position declared by a number of Ukrainian banks - leaders of retail lending sector in Ukraine – of the necessity to minimize the risk (both of the bank, and its borrowers), arising from the acceptance of insurance policies from insolvent insurance companies, was perceived by the ACU intelligently. Thus, the recommendations of the Antimonopoly Committee dated April 29, 2010 were yielded by the consolidated position of the banks and the ACU.

At present, OTP Bank, UkrSibbank, and Ukrsotsbank, as creditor banks and beneficiaries of the insurance indemnity for the collateralized property, are advising their private clients, on the basis of clear selection criteria and system of analysis of insurance companies’ financial reporting, to insure their property with those companies being on the recommended IC lists. Nevertheless, the client is always reserved the right (and, consequently, he/she shall assume certain risk) to insure the property with other insurance companies on terms and conditions agreed with his/her Bank.

We would like to note that it does not seem practical to completely resign the analysis of the insurance companies’ financial condition and stop recommending the most reliable companies to our customers. Some of the ICs are still having repercussions of the crisis and are not capable to fully perform their obligations under insurance contracts, this fact being publicly stated by the insurance market regulator – the State Commission for Regulation of Financial Services Markets of Ukraine.

Over the past year, there have been many licenses revoked and insurance companies liquidated, some of which belonging to the top 20 on the market (11 licenses were revoked in May alone). As a result, customers suffer financial losses, as they are left with paid insurance contracts which are known to bring no insurance benefit. In other words, having paid for the insurance, the client does not receive any insurance coverage. At that, insurance companies are not always transparent: this is frequently hardly for the client to obtain even those documents that the company is obliged to provide, not to mention financial statements and actual state of affairs with payment of benefits to clients which is a primary duty of any insurance company.

To date, banks and insurance companies are actively working out the options to expand the lists of recommended companies.

OTP Bank, UkrSibbank and Ukrsotsbank are ready for further constructive dialogue with all stakeholders.