Temporary administration of AB Ūkio bankas

1. Decision of the Central Bank to restrict activities of AB Ūkio bankas

1.1. On 12 February 2013 the Central Bank of Lithuania temporarily restricted activities of AB Ūkio bankas (UB) and appointed Mr. A.A. Audickas as a temporary administrator of UB. Restriction of activities (moratorium) is a measure for temporary partial restriction of activities of a bank. The restrictions applied are listed both in the Lithuanian legislation and in the decision of the Central Bank adopted for that matter. Based on the restriction it is forbidden for the bank to perform obligations to pay or to transfer property, if these obligations arise from transactions or other legal facts that have occurred until the day of announcement of restriction of bank activities (moratorium), except for payments that are necessary to ensure the restricted activity of the bank during moratorium.

1.2. The terms and conditions for the activities of the temporary administrator are specified in the temporary administration contract concluded between the Central Bank and the temporary administrator. After appointment of the temporary administrator the powers of the supervisory board, the board and heads of administration are suspended. Their powers to the extent necessary are exercised by the temporary administrator. Decisions of the general shareholders meeting come into force only after they are coordinated with both the temporary administrator and the Central Bank.

1.3. The temporary administrator heads the bank according to the instructions of the Central Bank and seeks to ensure a reliable and risk limiting management of the bank, to contribute to solution of the problems of the bank by solving issues falling within his competence or suggesting to the general shareholders meeting of the bank to adopt decisions necessary for that.

1.4. The temporary administrator, during the time period established by the Central Bank, must analyse and evaluate the financial state of the bank, possible ways for re-establishment of stability and reliability of bank activities and other ways for solving of bank problems and submit conclusions and suggestions to the Central Bank together with intermediary financial accounts composed on the basis of performed evaluation of financial state and other data specified by the Central Bank. The conclusions and suggestions of the temporary administrator must contain, among other things, a comparative likelihood of successful implementation of possible ways for re-establishment of stability and reliability of bank activities and other ways for solving of bank problems, the terms of their implementation, possible expenses and benefit, as well as a need to extend the term for restriction of bank activities (moratorium) and (or) adopt other decisions, allowing to implement the ways for re-establishment of stability and reliability of bank activities or other ways for solving of bank problems.

1.5. The temporary administrator has a right to terminate agreements with members of the board of the bank and heads of administration. These persons are not entitled to any severance pay. The temporary administrator must provide information about the process of administration to the Central Bank in the manner, established by the Central Bank and to the general shareholders meeting of the bank in the manner established by the general shareholders meeting. The temporary administrator must follow other instructions of the Central Bank.

1.6. Once the Central Bank takes the decision to transfer the property, rights, contracts and obligations (Property Transfer) of UB to another bank, this transfer will be performed by the temporary administrator, upon approval and in accordance with instructions of the Central Bank. The temporary administrator organizes and conducts negotiations on Property Transfer with banks that have a right to provide financial services connected to the Property Transfer.

1.7. On 16 February 2013 Mr. Audickas submitted his conclusions and suggestions to the Central Bank on re-establishment of stability and reliability of UB activities.

2. Decision of the Central Bank to recognize UB insolvent

2.1. On 18 February 2013 the Central Bank recognized UB insolvent and revoked its license. The Board of the Central Bank considered the conclusions submitted to it by the temporary administrator and decided to transfer the property, rights, contracts and obligations of UB to another bank, active in Lithuania.

3. Decision of the Central Bank on transfer of the property, rights, contracts and obligations of the bank

3.1. On 23 February 2013 a tripartite agreement was signed among the temporary administrator, AB Šiaulių bankas (a credit institution established in Lithuania) and State Enterprise Deposit and Investment Insurance on transfer of a part of the property, rights, contracts and obligations of UB to AB Šiaulių bankas. As announced publicly, the amount of obligations to clients that are transferred to AB Šiaulių bankas according to preliminary valuation accounts for approximately LTL 2,7 billion. The sum of transferred property and additional payment to be made by State Enterprise Deposit and Investment Insurance also amounts to LTL 2,7 billion.

3.2. During the transfer of the property, rights, contracts and obligations of the bank, all or part of bank property, rights (property and non-property rights) and contracts under administration as well as all of part of obligations of the bank may be transferred. However, the following exceptions apply:

3.2.1. In all cases obligations of the bank under administration to depositors and investors specified in the Law on Insurance of Deposits and Obligations to Investors of the Republic of Lithuania, to who in case of insurance event insurance payments shall be made not exceeding the amount which shall be paid to them by State Enterprise Deposit and Investment Insurance, as well as obligations of the bank to state institutions, arising from contracts concluded after the day of announcement about restrictions of bank activities (moratorium), shall be transferred;

3.2.2. The following obligations of the bank shall not be transferred:

a. Creditor claims regarding subordinated loans provided to the bank and non-equity securities issued by the bank, that have all features of a subordinated loan; and

b. Claims of shareholders of the bank, who have a qualified part of authorized capital of the bank and (or) voting rights, claims of members of supervisory board of the bank, claims of members of the board of the bank, claims of heads of administration of the bank;

3.2.3. Adherence to the principle that creditors of the bank under administration, not listed in points A and B above, the claims of who in case of bankruptcy of the bank would be satisfied in the same line as specified in article 87 of the Law on Banks, shall be treated equally and shall not suffer more losses than they would have suffered if instead of transfer of property, rights, contracts and obligations to another bank, bankruptcy proceedings had been initiated for the bank under administration at the same time, must be ensured.

3.3. In performing the transfer of the property, rights, contracts and obligations to another bank, all property, rights, contracts and obligations intended for transfer may be transferred at the same time, or in parts. Property, rights, contracts and obligations that have already been transferred may be returned under the conditions and terms specified in the transfer documents with corresponding changes to be made in the amount payable to the bank under administration, if such possibility is clearly stated in such documents or it turns out that property, rights, contracts and obligations that were not intended to be transferred, were transferred. In case of transfer of property, rights, contracts and obligations to which foreign law applies and such transfer is not recognized under foreign jurisdiction, the bank under administration shall transfer such property, rights, contracts and obligations under trust law to the bank, which receives them. The bank under administration and the receiving bank shall take all actions necessary to legally implement such transfer.

3.4. When performing the transfer of the property, rights, contracts and obligations of the bank under administration, provisions of the Civil Code, other laws and legal acts or of contracts concluded by the bank, requiring to inform creditors, debtors or other persons in advance about actions that are performed during transfer of property, rights, contracts and obligations, as well as requiring to receive for such actions permissions or consents of other persons, including consent of the creditor for assignment of the debt, or otherwise limiting the transfer of property, rights, contracts and obligations shall not apply. Transfer of property, rights, contracts and obligations shall not be regarded as infringement of a contract and (or) a justified reason for creditors, debtors or other persons to terminate the contract, concluded with the bank under administration. In case creditors, debtors or other persons terminate the contract in contravention of this provision, such contract may be returned back to the bank under administration.

3.5. After the transfer of property, rights, contracts and obligations is performed, the temporary administrator shall announce this immediately on the website of the bank under administration and no later than within 5 working days after the transfer in at least two of the national newspapers of the Republic of Lithuania. After the transfer of property, rights, contracts and obligations, if there is data showing that the bank under administration is insolvent, the Central Bank shall address the court for initiation of bankruptcy proceedings.