Ukrainian court has recognized the nationalization of PrivatBank as 'partially illegal'

On May 17, the Kyiv District Administrative Court recognized the nationalization of Ukraine's largest privately owned bank, PrivatBank, which took place on the night of December 18, as partially illegal. The court considered the claim of six individuals against the National Bank (NBU), the Individual Deposits Guarantee Fund, the Ministry of Finance, and persons authorized to perform interim administration at the Bank at the end of December 2016. The plaintiffs were co-owners of the media group 1 + 1, which belongs to Ihor Kolomoyskyi and Ihor Surkis, and namely, the Surkis oligarch family.

The plaintiffs asked the court to recognize as illegal a number of decisions that preceded the redemption of PrivatBank shares by the government. In particular, the plaintiffs demanded that the decision of the NBU, which they determine to be connected to bank individuals, be overturned.

In addition, they asked the court to invalidate the agreement on the purchase and sale of PrivatBank shares dated December 21, 2016, which was concluded between the Deposit Guarantee Fund and the Ministry of Finance, insofar as it concerns the rights and interests of the plaintiffs. They also demanded that PrivatBank return the deposits written off during the nationalization in the amount of more than 1 billion UAH and the interest they lost. The court satisfied all the claims by the plaintiffs.

The NBU has expressed its discontent over the decisions made by the courts. The National Bank is confident that all decisions regarding PrivatBank were taken exclusively within the framework of special procedures provided for by the Ukrainian law “On the System of Guaranteeing Individual Deposits.”  This was referred to in a statement by the NBU, which was published on Facebook.

"The National Bank notes that all decisions on PrivatBank were taken exclusively within the framework of the special procedure provided for in Article 41-1 of the Law of Ukraine, ‘On the System of Guaranteeing Individual Deposits.’ The National Bank will appeal to higher courts against such unjust decisions, and is confident in the legality of the bail-in procedure [converting the financial institution's liabilities to related parties into its shares with zeroing their value).

  Privatbank, Kolomoyskyi, Surkis, NBU, nationalization