09:42 19.04.2019

NBU notes fluctuations on currency market after announcing court decision on PrivatBank, to make all possible to prevent panic

2 min read
NBU notes fluctuations on currency market after announcing court decision on PrivatBank, to make all possible to prevent panic

The National Bank of Ukraine (NBU) has recorded negative fluctuations on the currency market after announcing a decision of Kyiv's district administrative court under claim of Ihor Kolomoisky seeking to declare the nationalization of PrivatBank illegal.

"We cannot predict today how this [the court's decision] will affect the exchange rate, although some fluctuations were noticeable today. The difference between the morning and the closure of the interbank market was a rise by 15 kopecks for the U.S. dollar and hryvnia ratio," NBU Governor Yakiv Smolii said at a meeting of the National Security Council held in Kyiv on Thursday evening.

He said that the NBU is making every effort to prevent panic: "We are doing everything possible to prevent panic, to prevent so far the influence of information that has emerged today on the stability of the banking system."

According to preliminary conclusions, in the event of the annulment of the decision to nationalize PrivatBank, Smolii said that the Deposit Guarantee Fund would have to pay about UAH 100 billion to depositors.

The head of the National Bank said that such payments can be made only at the expense of printing money, which can significantly affect both inflation and the hryvnia exchange rate, as was in the case with Naftogaz Ukrainy in 2014-2015 when the holding had to be capitalized.

Smolii said that the total balances of individuals' funds in PrivatBank amount to about UAH 140 billion, the bank services about 20 million depositors. "This is a quarter of the banking sector of Ukraine," the head of the NBU added.

According to him, today PrivatBank is operating with profit. An independent supervisory board and the management hired by it ensures the work of the bank within in line with the requirements dictated by the National Bank.

The governor of the NBU said that although the laws today do not provide for the return of PrivatBank to previous owners, such court decisions may violate a "fine line of stability" of the banking system achieved in previous years.

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