12 May 2022 12:08

Ukraine decides to seize Ukrainian assets of Russia's Sberbank, VEB

KYIV. May 12 (Interfax-Ukraine) - Ukraine's National Security and Defense Council has decided to seize assets in the country belonging to Russia and its residents, such as 99.8% of shares in Prominvestbank (PIB) owned by Russian development corporation VEB.RF and 100% of shares in International Reserve Bank owned by Sberbank.

The Council decision of May 11, which was confirmed the same day by a decree issued by Ukraine's president, also calls for the seizure of financial assets in the form of VEB.RF's rights to PIB debt totaling UAH0.93 billion and Sberbank's rights to International Reserve Bank debt totaling UAH14.9 billion.

Ukraine is also seizing other financial assets of these subsidiaries of Russian banks, with the exception of UAH3 billion belonging to International Reserve Bank that will be used to meet claims from creditors.

The council decision and presidential decree were published on the website of Ukraine's Verkhovna Rada on Thursday.

According to published documents, the seizure does not apply to the rights under loans from International Reserve Bank to rail operator Ukrzaliznytsia with about $166 million debt outstanding, to Electrotyazhmash - UAH516.9 million, Artyom holding company - UAH205.1 million and Zorya-Mashproekt - UAH2.325 billion, as well as for the rights under a PIB loan to Ukrzaliznytsia for $231.6 million, which are subject to transfer [probably to National Investment Fund, which the government designated for this role on May 10].

According to the National Security and Defense Council's decision, the Cabinet of Ministers and the Deposit Guarantee Fund, together with the National Bank, must ensure that these assets of the Russian Federation and its residents are seized within 10 days of the date of the decree's publication.

The Verkhovna Rada on Thursday approved a presidential decree of May 11 on the seizure of the Ukrainian assets of Sberbank and VEB.RF.

VEB said on Thursday that issues related to the expropriation of assets and compensation of losses will be resolved in international arbitration. It said the Stockholm tribunal recognized VEB as "an independent investor, and not a government body or part of the state."

Sberbank plans to challenge the seizure by Ukraine of its assets in that country. "Sberbank is initiating investment arbitration against Ukraine with a claim for damages based on the agreement of November 27, 1998 between the government of the Russian Federation and the Cabinet of Ministers of Ukraine on the encouragement and mutual protection of investments," the Russian bank said in a statement.

The Ukrainian government on April 9 decided to expropriate the corporate rights and financial assets removed from the market by International Reserve Bank and Prominvestbank. The decision is essentially the practical implementation of the Law on the Expropriation in Ukraine of Assets of the RF and its Residents, the Cabinet of Ministers said.

"Ukraine is recovering part of its financial assets in the form of claims on debt, funds in accounts, government bonds and [NBU] certificates of deposit. So of course, the next decision should be a decision by the National Security and Defense Council, but this important step [towards expropriation] has already been made today," First Deputy Ukrainian Prime Minister Yulia Svyrydenko said at the time.

The National Bank of Ukraine in March 11 sent a letter to the Cabinet of Ministers, in which it proposed to seize the financial assets of International Reserve Bank and Prominvestbank. The NBU envisaged that the state might receive around UAH 26 billion.

Both banks had their licenses withdrawn in February.