Ernst&Young (EY) independent auditor has confirmed low quality of the loan portfolio of PrivatBank, the National Bank of Ukraine (NBU) has reported on its website.

The NBU said that a financial report of the bank as of December 31, 2016 approved by EY auditors shows that loan loss provisions have been increased by UAH 155.9 billion on the bank's books.

Furthermore, the auditors identified the need for additional provisioning in the amount of UAH 10 billion. As a result, the bank's capital position turned negative at UAH 882 million as of the end of 2016.

The auditor was unable to verify the bank's profits and losses as well as cash flows due to the lack of documented evidence to support audit findings about the period when the impairment of loans and advances to customers occurred. The audit findings suggest that PrivatBank fell into distress long before 2016.

EY was hired to identify the bank's capital needs. Based on the audit findings, it was established that PrivatBank will require additional equity injections with public funds as a result of the mismanagement by the former bank’s owners and managers.

According to the annual report for 2016, the bank's loss stood at UAH 176.238 billion, loan loss provisions totaled UAH 184.3 billion, negative regulator capital was UAH 2.6 billion and the volume of impaired loans was UAH 206.5 billion.