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Ray McCormack
Nordar Innovations.
Posted - 2009.08.25 17:22:00 - [1]
 

Edited by: Ray McCormack on 20/09/2009 14:08:06
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Statement from the Board



Account Freeze

It is with deep regret that we inform you of our decision to suspend certain banking activities with immediate effect. As of now both withdrawals and interest are frozen until further notice. This decision has not come lightly, we have critically analysed all aspects of the business and decided it is in the best interest of our customers and the long-term sustainability of the bank that these actions be taken.

Mismanagement

In early March this year, as has been revealed previously, our then current CEO Ricdic embezzled funds for the purpose of RMT to the amount of 250b ISK. He was immediately dismissed and action was taken against him by CCP. He was also responsible, along with board members, for over-extending credit to a long standing loan customer. This loan, for an overall amount of 275b, was soon defaulted – leaving the bank with little recourse to recover the funds.

A 525b ISK loss should have been easy for a bank with 2 trillion in deposits and a year and a half of profit generation behind it; but what wasn’t clear was the extent to which Ricdic’s mismanagement had harmed the bank. Without proper management reporting it was also impossible for the Board to identify and resolve the worsening crisis, although we accept the fact this situation should never have been allowed to continue unchecked for as long as it did.

Deficit

With the recent establishment of maintainable financial statements the depth of the situation has started revealing itself. At this point in time EBANK is 1.2t ISK in deficit, which continues to increase by an estimated 12b ISK per month. This is an unacceptable situation, and without drastic action being taken there would be little chance of recovery.

Drastic Action

• Withdrawals are frozen, with the exception of deposits that were made after this announcement.
• Account interest has also been stopped, with the exception of loan interest.
• Loan defaults will be revealed, and ruthlessly pursued.
• The Board will be returned to its full complement of 9 Directors.

Interest and Withdrawal Switch

Interest will be turned back on when two conditions are met:
1. Interest from non-intensive activities sustainably matches or exceeds the monthly interest expenses.
a. Profit generation from sustainable, low maintenance operations needs to exceed 36b ISK.
2. The bank achieves an equity status not less than 85% of its liabilities.
a. Available capital must exceed 1.7t ISK. It currently stands at 0.8t.

Interest will be switched off again should equity fall below the 80% mark.

Withdrawals will be allowed once the bank achieves a maintainable equity status of 90% (1.8t currently); they will be stopped again should that fall below 80%.

Losses

Losses to date have occurred as follows:

1. ~250b – Ricdic Theft.
2. ~380b – Loan Defaults
3. >48b – Share Losses
4. ~466b – Interest Paid
5. ~75b – Salaries

There are possibly further losses not accounted for, such as operational losses, additional theft and reporting errors. As these are established we will report on them.

Ray McCormack
Nordar Innovations.
Posted - 2009.08.25 17:22:00 - [2]
 

How Did This Happen?

The truth is we do not have enough information at hand to establish this, without the benefit of robust reporting we don’t have any solid documentation to investigate. The internal forums allude to masses of wealth being generated through ventures run by Ricdic and others; however we cannot consolidate this against our current finances. We’re not even completely sure that he only managed to abscond with 250b; he may have gotten away with more. It is possible the bank has been running at a deficit since its inception – we have no evidence to disprove this.

What is certain is that this was allowed to happen by the Board; controls were not enforced, auditing was never completed and reporting was almost non-existent. That will change.

Changes

Full APIs are being pulled and stored for all staff members with access to funds, and you can at any time look at our Public Financials to see exactly with whom and where your ISK is.

Ventures, which for so long ran independent of the bank, are undergoing a major overhaul. They will for all intents and purposes just form another part of the bank, much as tellers and loan officers are. They will operate under the same strict standards that are being set for the bank itself.

Loans will be collateralised, that change has already been enforced. Prior defaults will also be revealed and ruthlessly pursued. They will also form part of our main focus.

There is a moratorium on salaries, they are still being recorded but won’t be paid until the bank is in a more stable condition, and definitely not before clients are able to get their ISK back.

Recovery

Without the burden of 36b in interest per month the bank can start down the long path to full recovery, and with further internal changes we’ll be aiming to triple our monthly profit generation within a very short timeframe. Whilst we can’t say for certain when we’ll achieve full liquidity, our aim is to turn interest and withdrawals back on within a year. However recovering a trillion ISK is a monumental task, and we ask for your patience whilst we go about this endeavour. Our Public Financials will be updated weekly, you have but to ask should you see something lacking.

The Future

The bank is now in a state of consolidation, we’ll be working towards strengthening the board with both executive and non-executive directors. Reporting will become more structured and transparent; the API will be used to greater effect in order to accurately report and alert us to issues. All members are committed to this action, we draw strength from the fact we are doing the right thing. We will answer any serious questions you may have and address any concerns you raise with honesty and to the best of our ability.

Yours Sincerely,
The Board and Staff
EBANK

EBANK Public Financial Statements
http://spreadsheets.google.com/pub?key=t1FCGqaDaXqV1xH1RLu1g9w&output=html

EBANK Forums
http://forums.eve-bank.net

Mechanogrin
Posted - 2009.08.25 17:28:00 - [3]
 

Edited by: Mechanogrin on 25/08/2009 23:38:03
Can I has your stuff?

first

Emily Spankratchet
Minmatar
Pragmatics
Posted - 2009.08.25 17:29:00 - [4]
 

Edited by: Emily Spankratchet on 25/08/2009 17:32:55
I have 17 million, can I help?

Srs edit:

Quote:
It is possible the bank has been running at a deficit since its inception – we have no evidence to disprove this.


That's probably the most interesting quote for me. You did a nice job presenting the appearance of an organisation that would at least know if it was running at a defecit or not. Nice website, good organisation, but nothing going on up top?

I live in the hope that the billion or so I have with EBank will be unfrozen at some stage, but it's not that important. What's more important in a way is that I hope a bank can actually work in Eve.

BarryGibb
Posted - 2009.08.25 17:31:00 - [5]
 

So much for trying to escape RL banking issues by playing a video game.

Skyvyr
Caldari
Ascendent.
On the Rocks
Posted - 2009.08.25 17:32:00 - [6]
 

Wow.

Well it seems there can't be a director shift without something bad coming out shortly after.


I look forward to the transparent direction that the bank is heading.

Good luck this year, I hope to see the goal reached!


Ray McCormack
Nordar Innovations.
Posted - 2009.08.25 17:34:00 - [7]
 

Originally by: Skyvyr
Well it seems there can't be a director shift without something bad coming out shortly after.

Just to be clear, LV stepped down and OZ joined us a week or so before this decision was made. We tried to buck the drama trend but to no avail.

Skyvyr
Caldari
Ascendent.
On the Rocks
Posted - 2009.08.25 17:36:00 - [8]
 

Originally by: Ray McCormack
Just to be clear, LV stepped down and OZ joined us a week or so before this decision was made. We tried to buck the drama trend but to no avail.


I know, I was meant that more as comedy than an actual trolling. It seems to happen elsewhere as well, a director steps down, badness ensues.


Secondskin
Amarr
Posted - 2009.08.25 17:37:00 - [9]
 

Originally by: Ray McCormack
What is certain is that this was allowed to happen by the Board; controls were not enforced, auditing was never completed and reporting was almost non-existent.


2 trillion in assets should be accompanied by more than a few sticky-notes on monitors, especially when part of those assets goes to paying, what was it, 75 billion isk in salaries?

At least crying foul late in the game and saying 'oops, we screwed up' is a perfect mirror for real-world banking. Congrats on that.

Good luck re-establishing trust; halting withdrawals may prevent a run on the bank's under-capitalized finances, but holding money where its true owners cannot reach it is still tantamount to theft. Or you can call it an extended no-interest loan to the bank on the public's behalf if you like. The effect is the same.


Originally by: "Ray McCormack"
with further internal changes we’ll be aiming to triple our monthly profit generation


That would have to be a very transparent set of internal changes. Nobody expects trade secrets to be revealed, but you can't magically triple monthly profits by simply wishing it so, and the track record of EBank to date isn't exactly stellar anymore.

Tesal
Posted - 2009.08.25 17:43:00 - [10]
 

So EBank was possibly a ponzi scheme from the start?

How is this possible without other members in leadership knowing?

Did the former leadership know?

How do you know it was Ricdic and not other members of EBank? Do you have any evidence that shows where the isk went from these other isk generating ventures and who was involved?

Can EBank recover from this? Is EBank insolvent, and if so, why not simply liquidate and pay the proceeds to investors rather than dragging this out for 6 months or a year?

When will remaining cash be returned to depositors?


Grendell
Technologies Unlimited
Posted - 2009.08.25 17:46:00 - [11]
 

Edited by: Grendell on 25/08/2009 19:26:52
Reserved.

Edit:

I have a few questions;

- What exactly are the steps, that will be taken in making EBANK much more transparent?
- What kind of a time line, do you expect to make a full recovery out of a defecit, given your current board plans and estimates?
- Were you specifically brought in on the board to help make this decision, and make a cleanup?
- Are current board and staff salaries still going to be given during this period of "repair" the same amount as before? As in will salaries remain at their previous levels, once customers are paid ofc?

I'll keep it shortWink

Anyhoo kudos to you guys for making a ballzy move, best wishes to the entrie EBANK team, you guys have done wonders in the past, I'm sure you can pull some wonders now.
much <3

Ray McCormack
Nordar Innovations.
Posted - 2009.08.25 17:50:00 - [12]
 

Originally by: Tesal
So EBank was possibly a ponzi scheme from the start?

How is this possible without other members in leadership knowing?

Did the former leadership know?

It's amazing how people pick up on one sentence in a post and run with it. It's a possibility due to the lack of supporting evidence, however common sense would suggest unlikely. But I'm not passed ruling things out yet. The board didn't know due to the lack of reporting standards, an incomplete audit and a tendency to take Ric on his word (as most people did).

Originally by: Tesal
How do you know it was Ricdic and not other members of EBank? Do you have any evidence that shows where the isk went from these other isk generating ventures and who was involved?

It's a definite possibility others were involved, possibly unknowingly. There just isn't any evidence to discover that.

Originally by: Tesal
Can EBank recover from this?

Yes.

Originally by: Tesal
Is EBank insolvent, and if so, why not simply liquidate and pay the proceeds to investors rather than dragging this out for 6 months or a year?

When will remaining cash be returned to depositors?

Read the OP.

Ray McCormack
Nordar Innovations.
Posted - 2009.08.25 17:50:00 - [13]
 

Originally by: Grendell
reserved.

You? Hardly. Smile

SCORPY
Posted - 2009.08.25 17:52:00 - [14]
 

Edited by: SCORPY on 25/08/2009 17:52:43


I think at this time assigning a new EBANK director named Bernie Madoff would be appropriate.

Why not? You guys obviously are poor judges of character. I recall several people repeatedly crying wolf about Ricdic being an accident waiting to happen, now you want to freeze withdrawals while bringing in even more new directors = even more risk to exacerbate the situation.

How can you not know what was lost in what way? Not know which losses were theft and by whom? I appreciate your communication and transparency, it's just not transparent enough. Whether that's really beyond your control or not is what I'm unsure of.

Sabina Rutha
Gallente
F.R.E.E. Explorer
The Initiative.
Posted - 2009.08.25 17:53:00 - [15]
 

Time for a new Ebank Banner instead of "EBANK ISK EVOLVED" I'm thinking "EBANK - YOUR ISK DESOLVED"


Grendell
Technologies Unlimited
Posted - 2009.08.25 17:53:00 - [16]
 

Originally by: Ray McCormack
Originally by: Grendell
reserved.

You? Hardly. Smile



I'm going out for lunch ray lol, I'll write an actual post when I get back hehe.

Ambo
I've Got Nothing
Posted - 2009.08.25 17:53:00 - [17]
 

Edited by: Ambo on 25/08/2009 17:54:06
Well this isn't good.

I'm now very glad I got twitchy and pulled my isk out of ebank earlier in the month.

Props to you guys for sticking with it. I really hope you manage to sort out this mess. For me though, this is the final nail in the coffin for banks in Eve. Ebank had nicely written proceedures, a well respected group of high-level industry and market types with good intentions and about as close to a cast iron rep as you can get. Yet it still failed.

From the sounds of it, you have taken the correct action, no matter how unpaletteable that may be. Good luck for the future, you're going to need it.

Ji Sama
Caldari
Tash-Murkon Prime Industries
Posted - 2009.08.25 17:54:00 - [18]
 

:)
I have faith in Ray and the Board.
You are doing what needs to be done, the truth can be ugly, but atleast you arent lying :)

Ray McCormack
Nordar Innovations.
Posted - 2009.08.25 17:55:00 - [19]
 

Originally by: SCORPY
Why not? You guys obviously are poor judges of character and incompetent. I recall several people repeatedly crying wolf about Ricdic being an accident waiting to happen, now you want to freeze withdrawals while bringing in even more new directors = even more risk to exacerbate the situation.

Look at my posting history and you'll see me at the top of that list.

Originally by: SCORPY
How can you not know what was lost in what way? Not know which losses were theft and by whom? I appreciate your communication and transparency, it's just not transparent enough. Whether that's really beyond your control or not is what I'm unsure of.

Please take a look at the Public Financials, specifically the Loss Analysis tab where we list all potential losses and expenses. That amounts to 1.2t ISK, near enough our deficit. Which would indicate the bank has been running without turning a profit, an unlikely situation. The reason there is no actual knowledge of the losses is due to the lack of reporting.

Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2009.08.25 17:57:00 - [20]
 

Edited by: Vaerah Vahrokha on 25/08/2009 17:59:44
I did not know you before today, but now I know you got two fat stones /respect.




I think the decision to freeze withdrawals WILL make people not exactly love you.



Anyway, like in other games, my predictions and statements show true:

Linkage

"Transparency. Transparency is what your Institution needs."


Glad to see your institution finally got it, and got you to enforce it.

With Hexxx this could not happen, he's too much a banker IRL to really enforce transparency.
He had the strength to understand and leave and let things run their course though.

He also warned people when one of the big debtors tried to gather more money (the famous "I advise against...").



Quote:

Good luck re-establishing trust; halting withdrawals may prevent a run on the bank's under-capitalized finances, but holding money where its true owners cannot reach it is still tantamount to theft. Or you can call it an extended no-interest loan to the bank on the public's behalf if you like. The effect is the same.



Originally by: "Ray McCormack"
--------------------------------------------------------------------------------
with further internal changes we’ll be aiming to triple our monthly profit generation
--------------------------------------------------------------------------------



That would have to be a very transparent set of internal changes. Nobody expects trade secrets to be revealed, but you can't magically triple monthly profits by simply wishing it so, and the track record of EBank to date isn't exactly stellar anymore.




Freezing money = people will REALLY run to withdraw the day they re-enable withdrawals and their reputation will be ashambles. Too bad, their rep will go down the crapper the only day the bank played transparent and honest.

SCORPY
Posted - 2009.08.25 17:59:00 - [21]
 

Edited by: SCORPY on 25/08/2009 18:01:50


Originally by: Ray McCormack

Look at my posting history and you'll see me at the top of that list.



I'm aware of that Ray. Sorry if it sounded personal; "you" was meant in an abstract form directed at EBANK as a whole.

I appreciate all your efforts though. You're one of the few I actually trust and I hope you can help turn this around. I'm not optimistic, but I'll still hope. I just cringe every time I hear more and more people are going to be involved.

Lecherito
Posted - 2009.08.25 17:59:00 - [22]
 

Do people need *any* more evidence that banks just do not work in Eve? How much money has been thrown away on this juvenile banking fascination? How many are lining up to throw their money into the new epic 1.5% bank coming out.

To all the ebank hooligans who paraded their "distributed risk policy" as the paragon of eve corporate structure, who urged people to leave their money in the interest-free account in support of the bank, who viciously attacked any criticism without so much as an argument, I ask you, how are you feeling right about now?

To everyone else, don't be fools. There's no such thing as banks in eve. Only "businesses" that haven't scammed yet.

-L

Ray McCormack
Nordar Innovations.
Posted - 2009.08.25 18:01:00 - [23]
 

Originally by: Vaerah Vahrokha
He also warned people when one of the big debtors tried to gather more money (the famous "I advise against...").

As did I, I was the post just after his.

Tesal
Posted - 2009.08.25 18:01:00 - [24]
 

Originally by: Ray McCormack


Originally by: Tesal
Is EBank insolvent, and if so, why not simply liquidate and pay the proceeds to investors rather than dragging this out for 6 months or a year?

When will remaining cash be returned to depositors?

Read the OP.



A bank that routinely runs in deficit is a ponzi scheme, thats how they work.

Given the time frame you outlined, and the scale of the theft, and the probability that several or many people were involved, this does not inspire confidence that continued operation will lead to success.

You should liquidate.

I think one can assume you are telling the truth. One can also assume that given the nature of the theft that this press release is nothing more than a cover for a theft of all remaining assets. Liquidating will at least restore trust in the current leadership of the bank. Anything short of that gives the appearance of impropriety.

Its time to pull the plug.

Jin Nib
Resplendent Knives
Posted - 2009.08.25 18:02:00 - [25]
 

Intresting. Wonder whats going to happen with the investments relying on E Bank.

If you guys can pull out of this on the other end the bank should be much better as a result. Good luck.

Athre
Minmatar
The Higher Standard
Posted - 2009.08.25 18:04:00 - [26]
 

Originally by: Tesal

You should liquidate.
Its time to pull the plug.


I believe you are short sighted. Everyone in EBANK is in it for the long haul. If we pulled the plug today we would be unable to pay back everyone's ISK. Please read the OP.

Karanth
Gallente
RONA Corporation
RONA Directorate
Posted - 2009.08.25 18:05:00 - [27]
 

Originally by: Lecherito
Do people need *any* more evidence that banks just do not work in Eve? How much money has been thrown away on this juvenile banking fascination? How many are lining up to throw their money into the new epic 1.5% bank coming out.

To all the ebank hooligans who paraded their "distributed risk policy" as the paragon of eve corporate structure, who urged people to leave their money in the interest-free account in support of the bank, who viciously attacked any criticism without so much as an argument, I ask you, how are you feeling right about now?

To everyone else, don't be fools. There's no such thing as banks in eve. Only "businesses" that haven't scammed yet.

-L


Only a moron gives money away to others and expects it back when there is no ingame mechanic to ensure that return.

Every ISK I have in there I could afford to lose, and if I lose it all, no big deal. If I had known in advance, I really wouldn't care.


Ray McCormack
Nordar Innovations.
Posted - 2009.08.25 18:05:00 - [28]
 

Originally by: Tesal
stuff

Thanks for your opinions, but they're not valid in this context. The deficit is genuine, we cannot pull the plug as we don't have enough ISK to pay everyone out. Once we do, we'll open withdrawals and let the public make their own decisions.

Rie Takahashi
Posted - 2009.08.25 18:07:00 - [29]
 

Originally by: Ray McCormack
As of now both withdrawals and interest are frozen until further notice.




ITT Ebank scams for the rest of the money that they hold Rolling Eyes


Ji Sama
Caldari
Tash-Murkon Prime Industries
Posted - 2009.08.25 18:07:00 - [30]
 

Originally by: Lecherito


To all the ebank hooligans who paraded their "distributed risk policy" as the paragon of eve corporate structure, who urged people to leave their money in the interest-free account in support of the bank, who viciously attacked any criticism without so much as an argument, I ask you, how are you feeling right about now?

-L


thats not fair, i paraded for the interest free gesture, i in no way attacked any criticism.


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