21 Jul 2023 16:12

Ukrainian govt approves NBU proposals on nationalization of Sense Bank

MOSCOW. July 21 (Interfax) - The Ukrainian government on Friday reached a decision on the state's participation in the removal of the systemically important Sense Bank, formerly Alfa-Bank, from the market to ensure the stability of the country's financial system and protect the interests of depositors and the bank's other creditors, Ukrainian media reported, quoting a Finance Ministry statement.

"The nationalization of Sense Bank will not affect the bank's fulfillment of its obligations to depositors and clients," the press release says.

The decision is based on a proposal by the National Bank of Ukraine and the imposition of sanctions against the bank's core owners.

The Finance Ministry has been put in charge of managing the bank's shares. The nationalization procedure, including the appointment of a new management, will be carried out as quickly as possible.

"The Finance Ministry will attract investors for the sale of Sense Bank when martial law ends," it said.

Sense Bank was the 11th largest of the 65 banks operating in Ukraine as of the beginning of June.

The NBU began the procedure to nationalize it on July 20. It is assumed that the state will become the full owner of Sense Bank over the weekend, so that it can work again without any restrictions from Monday, July 24.

It has been reported, quoting Sense Bank data, that the bank's direct owners are ABH Ukraine Limited (Cyprus) and ABH Holdings S.A. (Luxembourg), while the beneficiaries are Mikhail Fridman, Petr Aven and Andrei Kosogov, who are subject to Ukrainian sanctions, among others. Independent auditor RSM Ukraine LLC said in a report for 2022 that the beneficiaries' ties to Russia constitute a significant reputational risk for the bank and have a negative impact on its business.

Sanctions against Fridman, Aven and Kosogov in the form of a freeze on assets were imposed in Ukraine in October 2022, while sanctions against ABH Ukraine Limited and ABH Holdings S.A. (ABHH) have been in effect since July 5, 2023.

"The qualifying holders of Sense Bank JSC are unable to meet their commitments, as defined by the Law of Ukraine on Banks and Banking, specifically to maintain, on a permanent basis, a level of capital sufficient to comply with the regulatory ratios established by the NBU, and to take timely measures to prevent the Bank's insolvency," the NBU said.

Taking into account martial law in Ukraine and the current financial standing of Sense Bank, "all of the above poses a threat to the interests of depositors and other creditors of the Bank," the NBU said.

Provisional administration was introduced at Sense Bank effective July 21.