Nationalization of PrivatBank Ruled Illegal by Ukrainian Court
The District Administrative Court of Kyiv ruled yesterday that the nationalization of PrivatBank was illegal. The judges satisfied the claim of Ihor Kolomoisky, its former co-owner, oligarch and public supporter of presidential candidate Volodymyr Zelensky, against the National Bank of Ukraine. Back in 2016, Kolomoisky's PrivatBank was nationalized by the Ukrainian government for being insolvent. The NBU and the Ministry of Finance plan to file an appeal
Two and a half years following the nationalization of the largest Ukrainian bank, the Kyiv District Administrative Court ruled that the state became owner of the financial institution illegally.
“The defendants did not prove the legitimacy of classifying the bank as insolvent,” Kyiv District Administrative Court Judge Bohdan Sanin said.
The National Bank is already preparing to appeal the court’s decision. They say that in 2016, a major capital deficit was identified, which threatened to collapse the Ukrainian banking system. The state contributed more than 155 billion hryvnias to the bank from the state budget. This is equivalent to almost 6 billion dollars.
“The bank was declared insolvent due to extremely large-scale fraudulent schemes, which resulted in losses amounting to more than 5.5 billion dollars,” First Deputy Head of the National Bank of Ukraine Kateryna Rozhkova said.
Before the nationalization, the National Bank of Ukraine spent two years developing a program for saving Privat with its former owners, oligarch Hennadiy Boholiubov and Ihor Kolomoiskiy. According to President Petro Poroshenko, one of them plans to reclaim his lost assets if Volodymyr Zelensky wins the presidential elections.
“As you can see they cannot wait. They have already begun to implement their plans. This kind of gambling threatens tens of millions of customers with the loss of their savings and the country with a new economic crisis and default,” President of Ukraine Petro Poroshenko said.
Financial analyst Serhiy Fursa explains that the decision of the court is not final since there will be an appeal. If the appeal is not satisfied, the final decision will be made by the Supreme Court. But if the Supreme Court decides that PrivatBank was nationalized illegally, Ukraine may face financial collapse.
“The decision threatens Ukraine with default if it enters into force. It will put an end to our cooperation with the IMF. It will result not in economic growth in our country, but in serious impoverishment. Such as the exchange rate dropping by two to three times and inflation at 200%,” financial expert Serhiy Fursa said.
PrivatBank officials stated that regardless of who wins in the presidential race, the bank will continue its fight in international and Ukrainian courts.