9 Jun 2023 12:56

ABH Holdings agrees to sell 75.6% of Ukraine's Sense Bank, waiting for authorities' decision

MOSCOW. June 9 (Interfax) - ABH Holdings S.A. (ABHH) has reached a nonbinding agreement with an international investor to sell 75.6% of Ukraine's Sense Bank (formerly Alfa Bank), but further steps in the deal depend on the decisions of the Ukrainian authorities, including the president, National Security Council, Antimonopoly Committee and National Bank, ABHH said in a press release.

ABHH did not specify the details of the agreement or name the potential investor. Sense Bank's current beneficiaries are Andrei Kosogov, Mikhail Fridman and Peter Aven, who are subject to sanctions.

"ABHH is of the opinion that the potential sale to an experienced and reliable European investor would be aligned with broader Ukrainian interests, especially in the banking sector," the group said.

ABHH said the bill that was passed by Ukraine's parliament on May 29 and submitted for signing by the president on June 5 proposes a complicated procedure for the nationalization of Sense Bank and poses legal risks for all future investors. "We believe that the best outcome would be to leave the bank in private hands by facilitating the sale of Sense Bank shares," the release said.

ABHH said it does not intend to circumvent any sanctions legislation and will not take further steps on the sale until it obtains all the necessary approvals.

"The proposed transaction does not envisage any funds flowing to sanctioned shareholders," the release said. "The finalization of the sale is subject to fulfilling all conditions required by Ukrainian legislation and ensuring that no party violates sanctions legislation in any jurisdiction, including Ukraine."

The group said the first documents have been submitted by ABHH and the investor to the National Bank of Ukraine (NBU), and additional information will be provided in accordance with Ukrainian legislation. "We are making every effort to bring the ownership structure in line with Ukrainian legislation and to fully address the concerns of the NBU," the release said.

ABHH also said it has "received a legal opinion that the company is not prohibited by European Union, United States nor United Kingdom sanctions from transacting with the investor," however, under Ukrainian legislation, dealing in the assets of sanctioned persons is prohibited.

"ABHH recognizes that, in order to proceed with the sale, it will be necessary to obtain decisions of the relevant Ukrainian authorities, including decision from the National Security Council of Ukraine and Presidential Decree for an exception to this prohibition, decision of Antimonopoly Committee of Ukraine and National Bank of Ukraine," the release said.

At the end of March, the NBU suspended the voting rights of Sense Bank shareholders ABHH with 57.6006% and its subsidiary ABH Ukraine Limited with 42.3994%, citing their unsatisfactory business reputation. Under the decision, voting rights were suspended on 100% of the bank's shares until the violations are eliminated.

The reasons cited for deeming ABHH's business reputation inadequate were its participation in Amsterdam Trade Bank N.V. (Netherlands), which was declared bankrupt on April 22, 2022, and signs of the flawed reputations of bank beneficiaries Fridman, Aven and Kosogov, who are subject to sanctions.

ABHH's minority shareholders are Unicredit S.p.a. with 9.9% and The Mark Foundation for Cancer Research with 3.8736%.

In regard to ABH Ukraine, the NBU also cited some signs that its financial health was unsatisfactory.

Sense Bank announced on March 3 that a memorandum had been signed with potential investors from Poland who were interested in entering the Ukrainian market and that they had sent letters to the leadership of the NBU. Possible ways for an investor to acquire an equity stake are to buy new shares in the bank or buy shares from its unsanctioned direct shareholders, but the ban on 100% of votes probably made this impossible.

The NBU confirmed earlier that it had received letters from a potential investor and indicated that, given the EU sanctions against Fridman and Aven and the Ukrainian sanctions against them and Kosogov, these individuals do not have the right to control their assets and dispose of them in any way until sanctions are lifted.

It was reported earlier that in April 2022 the NBU appointed former Bulgarian Finance Minister Simeon Dyankov as trustee to vote with the shares indirectly owned by sanctioned owners of 88.2264% of Sense Bank and participate in the bank's management.

Sense Bank was the ninth largest by assets of the 67 banks operating in the country as of February 1, 2023, NBU data showed.