In line with a law on the failure of credit institutions and certain investment firms, the Luxembourg District Court dealing with commercial matters has ordered the dissolution and winding up of East-West United Bank S.A. on 7 February 2024, said a published by the Commission de Surveillance du Secteur Financier (CSSF) on the same day.
The judgement comes after the announcement in August 2023 that the bank, located at Villa Foch in Luxembourg City and which specialised in serving Russian-speaking clients, would .
The registration of a judicial decision was added to the Luxembourg trade and companies registry (Registre de commerce et des sociétés) on 8 February 2024.
The court has appointed Alain Rukavina as liquidator and Anick Wolff as supervisory judge, noted the CSSF in its communiqué. Delano has contacted Rukavina for comment.
Compensation scheme activated
A separate , also published on 7 February, announced that the Luxembourg investor compensation scheme (SIIL) had been activated as a result of the judicial liquidation of East-West United Bank.
The compensation scheme “reimburses claims resulting from the incapacity” of East-West United Bank to “repay money owed to or belonging to eligible clients and held on their behalf in connection with investment business; or return to eligible clients any instruments belonging to them and held, administered or managed on their behalf in connection with investment business” up to €20,000.
The law, however, excludes certain types of clients. The list includes “financial institutions, insurance undertakings, undertakings for collective investment, pension and retirement funds, professional or institutional investors, supranational institutions, States and central, regional or local administrations, members of the administrative and management bodies of EWUB, members personally liable for EWUB, natural or legal persons which hold at least 5% of EWUB’s capital” amongst others.
Assets drop from €724m to €152m
Registered in Luxembourg since 1974, East-West United Bank announced in the publication of its annual accounts for 2022 that its total assets had decreased from €724m (as of year end 2021) to €152m (as of 31 December 2022). In the same report, the bank also noted that it had recorded a loss on its operations of €57.8m, compared to a loss of €1.3m in 2021.
Russia’s full-scale invasion of Ukraine began in February 2022. The bank, in its 2022 annual accounts (published to the business register in September 2023), wrote: “In 2023, the ongoing geo-political instability caused by the war in Ukraine has continued to affect business environment of the Bank’s target markets as well as market values of part of remaining investment portfolio.”
“While, the Bank has successfully continued to downscale its business activities as well as has ensured monetisation of its assets well above its creditors’ obligations, the situation has not improved sufficiently in order to enable to re-establish a stable environment for any future business model of the Bank,” said the management’s report.