Kyiv injects $550 million capital into Ukraine’s PrivatBank

Ukraine’s Ministry of Finance has completed the fourth stage of the additional capitalization of Kyiv-based PrivatBank by issuing domestic government bonds worth UAH 16 billion ($570 million USD) covered by the bank’s shares, the Ministry’s website reports.

The Ministry of Finance stated that the recapitalization of the bank to UAH 38.5 ($1.38 billion USD) was in accordance to the Cabinet of Ministers’ decision of June 23, 2017. The decision was based on proposals by Ukraine’s National Bank (NBU) and recommendations of an expert analytical council on the participation of the state in the banks’ charter capital, as well as the opinion of Privatbank’s independent auditor, EY (formerly Ernst & Young).

The first tranche of this amount, which was the third phase of additional capitalization totaling UAH 22.5 billion ($800 billion USD), was granted to the bank in July 2017 in the form of government bonds covered by bank’s shares.

On December 18, 2017, PrivatBank’s Supervisory Board approved the revaluation of operating and non-operating real estate and financial leasing facilities and their share in the capital. Revaluation results revealed that the bank was in worse condition at the time of its transfer to state ownership than it was believed, which necessitated further capitalization in the amount of UAH 16 billion ($570 million USD).

As reported, in December 2016, the Ukrainian government adopted a decision on the nationalization of this largest financial institution in the domestic market. This move was proposed by the NBU and PrivatBank’s shareholders, the largest of whom at that time were Ihor Kolomoyskyi and Gennadiy Bogolyubov. The state received 100% of the bank’s capital, while PrivatBank increased its capital by UAH 116.8 billion ($4.18 billion USD).