18:57 06.06.2022

Alfa-Bank Ukraine working on $1 bln capitalization

3 min read
Alfa-Bank Ukraine working on $1 bln capitalization

Alfa-Bank Ukraine hopes to get permission from the Bank of England, US Treasury and, possibly, other regulators in the near future to carry out additional capitalization at the expense of subordinated debt for $ 1 billion from the funds of a number of its shareholders that fell under the sanctions, ex-Minister of Finance of Bulgaria Simeon Djankov, who in mid-April, in agreement with the National Bank, was given the right to vote on the majority stake in the bank, said.

"The shareholders wrote me an official letter at the end of last week that they agree to give this billion. The next step should be to contact the authorities and regulators of the jurisdictions where the shareholders' funds are located. And also to the Bank of England and the US Treasury. We need to ask the regulators to withdraw this $1 billion from sanctions, and it will go to increase the capitalization of the bank, to develop the Ukrainian economy," he said in an interview with Interfax-Ukraine.

Djankov noted that the amount of additional capitalization is determined from two equal components: $500 million will increase the bank's capitalization in case of a slower recovery of the clients' economy, and another $500 million is planned to be raised for a quick post-war economic recovery.

The trustee emphasized that today the bank fulfills all the requirements of the National Bank for capital.

"During the first conversation with the National Bank, I also explained how we came to this $1 billion. It is important for us to become part of the reconstruction of the economy, so I would like not $500 million, but $1 billion ... in a year or two we will approach the good and bad bank system to ensure a rapid economic growth. We think that for these purposes another $500 million is needed for our expertise in the bank to work on a new loan program for the development of the corporate sector," Djankov explained.

According to the financier, making this proposal, he took into account the experience of Mexico in 2004, when during the financial crisis some sanctions from the National Bank of Mexico and the US Treasury were eased for the capitalization of banks.

Commenting on a recent similar proposal by Deputy Prime Minister - Minister of Finance of Canada Chrystia Freeland to lift sanctions against Russian businessmen in exchange for their financing the restoration of Ukraine, the expert noted that he was not surprised that they were talking about this abroad.

"We need a lot of money. Yes, the World Bank, the EIB, other IFIs will give some money, but this is not enough. Ukraine needs additional funds and it needs them now," the ex-minister said.

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