NBU challenges rulings of administrative court on unlawfulness of nationalization of PrivatBank, list of affiliated persons

The National Bank of Ukraine (NBU) on May 24, 2019 filed counterclaims against two verdicts of the district administrative court of Kyiv dated April 18, 2019, which annulled the decisions of the NBU on the withdrawal of insolvent PrivatBank from the market with the participation of the state and on determining the list of persons affiliated with the bank.

"So today, the above-mentioned court rulings did not take effect and have no legal consequences," the NBU said on Friday.

The NBU commented on some of the arguments of the court, which served as the basis for issuing these court decisions, with which it cannot agree.

Thus, the Kyiv district administrative court completely ignored: the establishment of PrivatBank's need for its capitalization by the NBU; the failure of PrivatBank and its shareholders, Ihor Kolomoisky and Hennadiy Boholiubov, to implement the program of financial recovery for the bank's additional capitalization, which became the basis for classifying the bank as insolvent. At the same time, the court made false conclusions that the basis for the decision was only reports of structural units of the NBU, which is not true.

As the central bank said, the court also incorrectly applied the substantive law regarding the essence of credit risks and the formation of reserves for them and came to the erroneous conclusion that banks calculate credit risks solely on credit agreements for which there is a delay in execution, and in all other cases reserves on active operations should not be formed at all. In addition, the court was unable to define the concept of "active operation", equating it to the concept of "unfulfilled operation."

The decision of the NBU does not violate the rights of Triantal Investments Ltd, because as a shareholder of the bank it was recognized by its board as affiliated with PrivatBank during the time of the previous owners, therefore there is no violated right as a ground for the claim, around the protection of which a dispute arose. Therefore, the court should have denied the claim.

According to the NBU, the court also violated subject matter jurisdiction, identifying a violation of the rights of the former owner of PrivatBank's shares as a basis for filing a claim, but in this case the case should be considered by the court of economic jurisdiction, and not administrative.

As reported, the Cabinet of Ministers of Ukraine on May 16, 2019 challenged a ruling of the district administrative court of Kyiv on the unlawfulness of the nationalization of PrivatBank.