12:57 10.04.2017

PrivatBank last night before nationalization settles fraud transactions for UAH 16 bln, banks requires additional capitalization

2 min read
PrivatBank last night before nationalization settles fraud transactions for UAH 16 bln, banks requires additional capitalization

The post-audit of PrivatBank (Dnipro) after its nationalization has revealed additional problems at the bank, which would require an additional capitalization of the bank by the state, Governor of the National Bank of Ukraine (NBU) Valeriya Gontareva has said.

"Last night [before the nationalization] they settled fraud transactions in the amount of over UAH 16 billion," she said at a press conference in Kyiv on Monday.

She said that the post-audit established that not 97%, but 100% of the corporate portfolio was issued to affiliated persons.

"The necessity to additionally capitalize is more and the state would have to pay more money for the management of the bank by this team of oligarchs and managers," she said.

She recalled that initially it was assessed that PrivatBank faces a lack of UAH 146 billion of capital or near $6 billion, which is around 50% of the monetary base and 33% of individuals' deposits.

Gontareva said that former owners, in particular, Ihor Kolomoisky, gave personal guarantees to implement the capitalization program that has not been implemented.

Deputy NBU Head Kateryna Rozhkova said that the results of the audit will be published late April or early May.

"As for the additional capitalization, we are cooperating with the Finance Ministry and PrivatBank drafting the program," Rozhkova said.

As reported, the revised memorandum signed between the Ukrainian government and the International Monetary Fund (IMF) foresees the issue of government bonds worth up to UAH 98 billion, or 3.6% of GDP, in 2017 to handle additional capitalization of banks and the Individuals' Deposit Guarantee Fund in Ukraine. At the same time, the document posted on the IMF's website does not elaborate on the list of such banks and amounts of additional capitalization of the fund.

The Ukrainian government on December 18, 2016 decided to nationalize Ukraine's No. 1 bank, Dnipro-based PrivatBank. It became wholly owned by the state. After the government became its owner, the Finance Ministry additionally injected UAH 116.8 billion into it, including UAH 9.8 billion in 2017.

Early in February 2017, PrivatBank CEO Oleksandr Shlapak did not rule out there could be additional capitalization after the audit of its capital.

PrivatBank plans to inform the Finance Ministry and the National Bank of Ukraine early in April about how much funds it needs for further capitalization. According to Shlapak, the sum will incorporate both Cyprus-based and Crimean-based assets held by the bank.

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