Starting from 7 October 1998 Eesti Pank announced
a moratorium to AS ERA Pank. The moratorium was directly
caused by a letter to Eesti Pank in which ERA Pank advised of
possible temporary insolvency problems in the near future and
due to that inability to satisfy the claims of all its
customers. In that letter ERA Pank asked for temporary
suspension of its licence.
The moratorium, which aim was to clarify the reasons and
nature of insolvency, was announced by the central bank based
on Articles 65 and 66 of the Law on Credit Institutions and
Par.1 Article 24 of the Law of the Central Bank of the
Republic of Estonia. Eesti Pank President's Decree on the
moratorium was signed by Acting President Helo Meigas.
Veli Kraav was appointed moratorium administrator. The
task of the moratorium administrator is to clarify the
financial status, reasons and nature of insolvency of AS ERA
Pank and to report to Eesti Pank on the future prospects of
ERA Pank by 15 October 1998 at the latest.
Without a written consent of the moratorium administrator,
ERA Pank is prohibited from granting and/or paying out any
credit; taking and/or meeting any financial liabilities in
any form either directly or indirectly; making any pay-outs,
including those to stock-holders, managers, employees of the
bank or any other persons and executing any transactions
stated in Article 5 of the Law on Credit Institutions.
According to the need, the depositors of ERA Pank will be
protected by the Deposit Insurance Fund Act. According to the
Act, the deposits of single individuals, small and medium
size businesses, are compensated up to EEK 20 thousand per
deposit, but not more than 90 per cent of the deposited
amount.
Intensive money outflow from the bank started on 6 October
and the liquidity figures pointed to the steep deterioration
of the situation. In order to guarantee equal treatment of
all creditors and maximum protection customers' interests,
Eesti Pank decided to act decisively and immediately to the
situation.
