Ukraine Nationalizes Its Largest Bank, Which Holds 36% Of All Domestic Deposits
By Tyler Durden
It was just a few short days ago, on Wednesday of last week, that Ukraine’s largest lender, PrivatBank, said that reports it will be nationalized were attempts to create panic and destabilize the political situation in the country.
Local media quoted by Reuters, has speculated that Privatbank, which is part-owned by one of Ukraine’s richest men, billionaire Ihor Kolomoisky, could be privatized if it does not meet a year-end deadline for Ukraine banks to reach a capital ratio requirement agreed under an International Monetary Fund bailout program, Reuters reported.
What makes Privatbank unique is that with some $6 billion in private deposits – of 36.5% of Ukrainian banks’ total – it puts America’s own TBTF banks to shame: the bank is an absolute giant which controls nearly half of the local banking sector.
On Wednesady, the bank’s deputy chairman said its customers had received phone calls and messages telling them the bank would be taken under state control due to a failure to meet the required capitalization level. “Exploiting the ignorance of citizens about nationalization, they stir up panic,” Oleg Gorokhovsky said, without saying who was behind the reports.
In a separate statement the bank said that “the information attack on Ukraine’s largest bank, Privatbank linked to the ‘pseudo-nationalisation’ of the bank is primarily directed at clients of the bank and is an attempt to destabilize the political situation in the country.” It added that the reports of its imminent nationalization were politically motivated.
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Fast forward four days, when late on Sunday night, the “attempts to create panic and destabilize the political situation” in Ukraine turned out to be true after all, and whether politically motivated or otherwise, the Ukrainian government announced hours ago that it would nationalize the suddenly very ironically named PrivatBank, unleashing one of the biggest shake-ups of the banking system since the country plunged into political and economic turmoil two years ago.
In a statement late on Sunday, the government made no mention of the size of the potential burden to the state budget, but said it would ensure a stable transition and the smooth functioning of the bank.
According to Reuters, The Finance Ministry would take over PrivatBank, with Finance Minister Oleksandr Danylyuk adding that depositors’ money was safe and secured by the state, and that the bank was functioning normally. It was not immediately clear if Ukraine had $6 billion in liquid funds to distribute to PrivatBank depositors should there be a run on the bank tomorrow, as some expect.
“The private shareholders of PrivatBank proposed to the government that it become the bank’s owner in the interests of its clients,” the government said in a statement.
“The transition period begins on 19 December. The state will ensure a smooth transition and the stable functioning of the bank.”
The unprecedented bailout could fuel instability in Ukraine, where opposition parties have repeatedly called for snap elections to unseat the pro-Western leadership that took power after the 2014 Maidan protests. As Reuters notes, the opposition …read more
Source: Ukraine Nationalizes Its Largest Bank, Which Holds 36% Of All Domestic Deposits
