Ukraine nationalizing PrivatBank to stave off collapse
KYIV. Dec 19 (Interfax) - The Ukrainian government has decided to nationalize PrivatBank, the country's biggest savings institution.
The bank, whose core shareholder Ihor Kolomoiskiy was head of the Dnipropetrovsk regional administration until 2015, holds around a third of retail deposits in Ukraine and needs recapitalization, experts have said.
The Ukrainian Cabinet, meeting on Sunday, discussed the stability of the country's financial system. "Taking into account the results of the meeting of the National Security and Defense Council of Ukraine, the government backed the proposal of the National Bank of Ukraine (NBU) and the financial stability council to transfer 100% of shares in PJSC PrivatBank to state ownership," the government said on its website.
The Finance Ministry will own 100% of PrivatBank on behalf of the state, which will guarantee the bank is able to operate steadily and protect client funds.
"This is being done in clear coordination with international financial institutions and with their support," the government said.
The National Bank of Ukraine (NBU) is ready to support PrivatBank with liquidity from Monday if it is required, NBU Governor Valeriya Gontareva said.
"From Monday the NBU plans to support PrivatBank with liquidity if required for providing stable payments of deposits," Gontareva said at a briefing on Monday.
"The share of fixed-term deposits is large. The most important thing is that this is a fully state-owned bank that guarantees deposits to individuals. We do not expect that there will large outflow of deposits from PrivatBank. We do not foresee that this factor would considerably influence the currency market and inflation," she said.
Oleg Gorokhovskiy, first deputy chairman of PrivatBank's management board, said on Facebook that the bank was in need of recapitalization and improved loan collateral. An information war had been waged against the bank in recent days and cash machines had been dispensing an unprecedented UAH 2 billion or more a day to frightened customers, he said.
Head of the Council of the National Bank of Ukraine (NBU) Bohdan Danylyshyn said the nationalization of PrivatBank is the right decision of the state, and there is no reason to worry about the protection of deppsits.
"In the current situation the decision about PrivatBank is responsible and creating the reliable base for the further operation of both PrivatBank and the country's entire banking system. PrivatBank is a systemic bank. It is important for the financial system. The bank is the largest savings bank of the country. I believe that this is the right decision of authorities and the NBU at the present stage of country's development," Danylyshyn said on Facebook on Monday.
He said that PrivatBank is important both for the country's financial and economic security and national security. "There is no reason to worry of the fate and safe keeping of the money for the bank's clients if the state takes responsibility for this," he said.