President of the European Bank for Reconstruction and Development (EBRD) Suma Chakrabarti has said that the EBRD is strongly supportive of the decision of the Ukrainian government to nationalize PrivatBank and to protect the bank’s depositors, both individuals and businesses.

"The nationalization which took place with the cooperation of existing shareholders will be combined with adequate recapitalization and liquidity back-up provided by the authorities to ensure the bank’s stable financial position and operation," EBRD said in a statement on Monday.

"The long-term stability of PrivatBank, the largest bank in Ukraine, is crucial to the country’s economic health. We believe the decision to nationalize it is the right one and have offered our expertise to the authorities whenever it is needed," Chakrabarti said.

"We strongly support the National Bank’s continuing efforts to reform the banking system in Ukraine and ensure good governance across the industry," he said.

Francis Malige, EBRD Managing Director for Eastern Europe and the Caucasus, said that nationalization of systemic banks allowed many developed countries protect their economies during the global financial crisis and it is the right way forward for Ukraine now.

In the case of Privatbank, a respected Western firm that is well known to the EBRD will be advising the Ukrainian authorities in the bank’s management and transformation, the bank said.

As reported, the government under a proposal of the National Bank of Ukraine (NBU) and shareholders in PrivatBank on December 18 made the decision to nationalize the financial institutions: the state would receive 100% of the bank's capital, and the issue of government domestic loan bonds for this purpose is estimated at UAH 116.8-148 billion.