24 Jul 2023 11:23

Ukraine nationalizes Sense Bank

MOSCOW. July 24 (Interfax) - The Ukrainian Finance Ministry and Deposit Guarantee Fund on July 22 signed an agreement on the sale of 100% of the shares of the systemically important Sense Bank, formerly Alfa-Bank, for UAH 1, according to which the financial institution becomes state property.

"This will help protect the interests of the bank's depositors and avert threats to financial stability in Ukraine," Ukrainian media reported, citing the Finance Ministry.

The Deposit Guarantee Fund has appointed senior managers at the bank following a proposal by the Finance Ministry, with the National Bank's approval. Dmitry Kuzmin, who headed Ukrainian Universal Bank until Sergei Tigipko's TAS group, bought it from the Eurobank Group at the end of 2016, was appointed as Sense Bank's CEO. Prior to that, Kuzmin worked at Raiffeisen Bank Aval, and earlier at Citibank, where he was head accountant for more than ten years. He was an independent member of the supervisory board of AS PrivatBank from 2020.

The bank says on its website that Elena Zubchenko, Alexei Shklyaruk, Inna Tyutyun and Andrey Sokolov became members of the management board following the nationalization, but more detailed information about them is not available.

According to information on social media, Shklyaruk had been a member of the management board of Agroprosperis Bank from 2016 and was responsible for risk management, prior to which he worked in risk management at Credit Agriclole. Sokolov worked at Pivdenny Bank from the end of 2017, heading of corporate business department in April 2020. Tyutyun was the deputy CEO of the Ukrainian Association of Fintech and Innovative Companies from June 2018, and prior to that deputy CEO of Ukrgazbank.

Zubchenko previously headed the Finance Ministry's Financial Policy Department.

According to Sense Bank data, Sevki Acuner is the new chairman of the supervisory board - he headed the European Bank for Reconstruction and Development's representative office in Ukraine from June 2013 to June 2018. He has chaired the Ukrzaliznytsia or Ukrainian Railways supervisory board and served on the supervisory board of Ukrenergo.

The bank says on its website that the two independent members of the supervisory board are former PwC Legal Ukraine Managing Partner Andrei Pronchenko, now the director of legal affairs of DNA Payments Group, and CEO of the Ukrainian Association of Fintech and Innovative Companies Rostislav Dyuk.

The state representatives on the supervisory board are Andrei Svistun, head of the department at the Finance Ministry of Finance who was a member of the supervisory board of the state-owned Ukrgasbank from May to November last year; and the secretary of the working group on sanctions against Russia, Vladislav Vlasyuk, who has extensive experience at the Justice Ministry.

The ministry said the National Bank set the bank's nationalization in motion on July 20. The next day, the government accepted a proposal by the National Bank to become the new owner of the bank after the introduction of provisional administration and designated the Finance Ministry as the body responsible for managing its shares.

Provisional administration was introduced at Sense Bank effective July 21.

Sense Bank was the 11th largest of the 65 banks operating in Ukraine as of the beginning of June. It held around 3.4% of the Ukrainian banking sector's assets.

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 main owners of Sense Bank, according to the Ukrainian Central Bank, are not able to "fulfill the obligations specified by the On Banks and Banking Activities Law of Ukraine to maintain on an ongoing basis a level of capital sufficient to comply with the normative values established by the National Bank, and take timely measures to prevent its insolvency. Under the conditions of martial law in Ukraine and taking into account the current financial condition of the bank, all of the above poses a threat to the interests of depositors and other creditors of the bank. Under such conditions (...) the National Bank is obliged to render the decision to withdraw the systemically significant Sens Bank from the market," the NBU reported.

The official exchange rate for July 24 is UAH 36.57/$1.