Ukraine to appoint international advisor for sale of Ukrgasbank, Sense Bank by June, but former Sense Bank owners opposed
MOSCOW. March 26 (Interfax) - Ukraine's Finance Ministry will appoint a financial advisor by the end of May to help prepare the sale of two systemic state banks, Sense Bank (formerly Alfa Bank) and Ukrgasbank, which account for respectively 4% and 6% of the banking system's assets, Ukrainian media reported, citing the International Monetary Fund's updated EFF program for the country.
"We will [...] prepare two systemic state-owned banks (SOB) for sale, Sense Bank and Ukrgasbank by selecting and appointing an internationally recognized financial advisor using a transparent procedure by end-May 2024 and with IFIs [international financial institutions] as observers," a Ukrainian government memorandum posted on the IMF website said.
The main criteria for selection will include an international track record in the sale of financial institutions and the submission of a comprehensive sale action plan. The advisory fee will not be the key determining criterion.
"In preparation for privatization of banks with majority public ownership, we will review and update the 2012 draft law on SOB privatization in consultation with IFIs and for submission to Parliament by end-March 2024," the updated memorandum said.
ABH Holdings SA (ABHH), which owned Sense Bank before its nationalization and filed a claim of over $1 billion against Ukraine in the International Center for Settlement of Investment Disputes (ICSID) at the end of 2023, issued a statement denouncing the plans laid out in the IMF publication.
"At the time when there is an ongoing ICSID arbitration concerning the expropriation, we consider the action by the IMF as interfering with the substance of the case, on the side of the respondent state, and a threat to the integrity of the arbitration," ABHH said.
ABHH said the IMF's position on this issue pushes away the "Global East and the Global South."
ABHH also again warned potential investors against buying Sense Bank, as the group believes it has a good chance of winning its case in light of the law and practice of transnational tort claims.
ABHH, commenting on press reports about the potential privatization of Sense Bank at the end of January, said that it will consider any transfer of the bank to a third party investor as the sale of stolen property.
ABHH filed the ICSID claim of over $1 billion against Ukraine, demanding full compensation, on December 29, 2023.
Ukraine took over Sense Bank last July under a special law that allowed its nationalization as a systemically important bank on the grounds that it had persons subject to sanctions among its principal shareholders.
ABHH's principal shareholders are Mikhail Fridman with 32.8632%, Petr Aven with 12.4018% and Andrei Kosogov with 40.9614%. ABHH's minority shareholders are Italy's Unicredit S.p.a. with 9.9% and The Mark Foundation for Cancer Research with 3.8736%.
ABHH announced in June 2023 that it had reached an agreement to sell 75.6% of Sense Bank to an international investor for $1 billion. However, in late September, after the bank's nationalization, the group announced plans to seek international arbitration.