Due to circumstances around the Autonomous Republic of Crimea and the city of Sevastopol which made it impossible for the National Bank of Ukraine (the “NBU”) to carry out banking regulation, currency control and state financial monitoring of the banks’ activities in those regions, with effect as of May 6th, 2014, the NBU imposed a prohibition on conducting of any banking activities in those regions. Such decision was formalised by the Resolution of the Management Board of the NBU No. 260 “On Revocation and Cancellation of Banking Licences and General Licences for Conducting of FX Transactions of Certain Banks and Closure of Banks’ Subdivisions Located in the Territory of the Autonomous Republic of Crimea and of the City of Sevastopol” (the “Resolution 260”).

The Resolution 260 provides for, among other things:

• a prohibition on Ukrainian banks opening subdivisions (including branches and outlets) in the territory of the Autonomous Republic of Crimea and of the city of Sevastopol, as well as an obligation on Ukrainian banks to shut down the activities of their existing subdivisions in those regions and to close such subdivisions within one-month period starting from May 6th, 2014;
• a prohibition on provision by banks of financial services to their clients in the territory of the Autonomous Republic of Crimea and of the city of Sevastopol on the basis of agency agreements with legal entities (commercial agents);
• a prohibition on Ukrainian banks establishing correspondent relations with Ukrainian and/or foreign banks and/or other credit/financial institutions located, or conducting their activities, in the territory of the Autonomous Republic of Crimea and of the city of Sevastopol, as well as an obligation on Ukrainian banks to terminate existing correspondent relations with such banks and institutions;
• revocation and cancellation of banking licences and general licences for conducting of FX transactions of the Public Joint-Stock Company “Chernomorskiy Bank of Development and Reconstruction” and the Public Joint-Stock Company Bank “Morskoi”, termination of their participation in the system of electronic payments of the NBU, cancellation of agreements on their membership in the international payment systems, as well as prohibition on payment organisations of payment systems rendering services to such banks.

The Resolution 260 entered into force on May 6th, 2014 and is not limited in duration.