The Crimea: Legal and Tax Issues in Banking

The Crimea: Legal and Tax Issues in Banking

25 April 2014

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Dear partners!

In the existing situation of uncertainty, we understand how many important and difficult questions arise in relation to conducting banking business within the territory of the Crimea. We, as KPMG, are always ready to help our clients with the arising issues. In particular, we are ready to assist you with the following issues related to conducting banking business in the Crimea:


1. Protecting business and ensuring banking activities

Goal: development and implementation of effective mechanisms of legal protection of the bank’s significant assets in the Crimea (including credit portfolio, mortgages, pledges and other security of the bank’s loans), as well as ensuring operational activity.



Scope of services:

  • analysis of available protection mechanisms of the significant assets from legal, regulatory and tax perspective, as well as from other implications
  • suggestions on the most efficient protection mechanism of the bank’s significant assets
  • legal assistance in implementation of the chosen mechanism
  • development of the bank’s HR strategy in new business environment and assistance in its implementation (including issues relating to staff hiring, formalization of labor relations)
  • advice on conducting banking business from Russian and Crimean laws perspective (including clarifications of the Central Bank of the Russian Federation, the State Council of the Republic of the Crimea, the Republican Bank of the Crimea)


2. Selling business to a bank group’s subsidiary in the Russian Federation

A few Ukrainian commercial banks or parent companies of Ukrainian commercial banks have subsidiaries in the Russian Federation. In this regard it is rather expedient to consider an option of business sale (transfer) to the bank group’s subsidiary in the Russian Federation



Goal: development and implementation of the optimal restructuring option of the banking business within the territory of the Crimea (including issues relating to the corporate structure, staff hiring, business financing) via the transfer of the bank’s assets and liabilities in the Crimea (including credit and deposit portfolios, mortgages, pledges and other security of the bank’s loans, bank guarantees, letters of credit) to the bank group’s subsidiary in the Russian Federation.



Scope of services:

  • analysis of available options of the transfer of the Ukrainian bank’s assets and liabilities in the Crimea to the bank group’s subsidiary in the Russian Federation
  • suggestions on the most optimal option
  • ◦legal assistance in the transfer (sale) of the Ukrainian bank’s assets and liabilities in the Crimea to the bank group’s subsidiary in the Russian Federation (including replacement of the party in agreements, obtainment of permits, registration procedures, etc.)


3. Selling business to unrelated parties

Goal: legally safe and tax efficient exit strategy for the Crimean business. The transaction should be optimally structured from both Ukrainian and Russian laws perspective.



Scope of services:

  • legal and tax structuring of the transaction
  • pre-sale legal and tax due diligence and restructuring procedures (if necessary)
  • business evaluation (performed by KPMG’s certified specialists)
  • preparation of the transaction documents
  • participation in negotiating process with potential buyers
  • assistance in closing the transaction (obtainment of necessary permits, re-registration of shares (participation interests), etc.)


4. Closing (winding-up) business

Goal: legally safe and tax-efficient return of investment as a result of the closure (liquidation) of the business in the Crimea.



Scope of services:

  • legal assistance in pre-liquidation procedures (including termination of contracts, staff reduction, sale of assets (including, property of the bank’s subsidiaries within the territory of the Crimea), settlement of liabilities, return of the remaining property to the bank’s shareholders)
  • complex assistance in liquidation procedures (including preparation of corporate documents, assistance in the course of audits of controlling authorities and deregistration procedures)

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