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bne June 2017 Special report I 27
roadmap should be revised, and that PrivatBank could fill a vacant space on the mortgage market when it is created in Ukraine.
"With good management, this would become a real success story," Gontareva said in an interview with Novoye Vre-
mia magazine. "It [PrivatBank] could be also a good platform for work with small- and medium-sized enterprises. There is liquidity and a good platform to do this."
However, PrivatBank's finances are currently in need of stabilisation. The restructuring of the bank’s corporate credit portfolio by its former owners, Ukrainian oligarchs Ihor Kolomoisky and Hennady Bogolyubov, is a crucially important step towards this goal.
The two businessmen have committed to carrying out a restructuring pro- gramme by the middle of 2017, though Gontareva has cast doubt on whether
such severe problems. Still, four years is a long time and the government is incentivised to get this done."
In December, Francis Malige, the EBRD'S Managing Director for East-
ern Europe and Caucasus, joined the supervisory board of the nationalised PrivatBank. However, commenting on possible investments to the battered lender in the future, the EBRD's Usov said that while the Ukrainian authori- ties continue their assessment of the lender's financial shape, "it would be too early to discuss any participation".
Meanwhile, the IMF noted in its report published on April 4 that it is now crucial that the nationalisation of PrivatBank is followed by "firm and transparent" efforts to collect related- party loans, to minimise the cost to the state and taxpayers. "Over the medium term, PrivatBank should be privatised," the document reads.
... in consultation with IMF staff, will establish memorandums of under- standing with all state-owned banks [PrivatBank, Oschadbank, Ukrexim- bank, Ukrgasbank] in order to inter alia define a relationship framework between the finance ministry and each bank, and safeguard each bank’s com- mercial independence in achieving its objectives," the document says.
"Ukraine has too consistently dem- onstrated an insufficient capacity for reform when left to its own devices and without being dragged or even threat- ened by Western institutions, and in particular the IMF," Mark McNamee, a London-based analyst at Frontier Strat- egy Group, tells bne IntelliNews. "To my knowledge, the EBRD is eager to partici- pate in such an important process that would potentially lay the groundwork for a transparent and effective banking sector for years."
Indeed, the EBRD and the Ukrainian gov- ernment have already agreed on steps to support reforms at Oschadbank. As per
a memorandum of understanding signed by the EBRD, the Ukrainian finance ministry and Oschadbank in November 2016, the multinational lender will help Oschadbank prepare the implementation of a comprehensive programme for its commercialisation and partial privatisa- tion, scheduled for 2018.
As a first step, the EBRD will bring Oschadbank into its Trade Facilitation Programme (TFP), providing guarantees of up to €50mn in support for Ukrainian exporters and importers. The TFP promotes foreign trade to, from and within the EBRD’s countries of operation, including Ukraine.
In a parallel effort, the EBRD will support Oschadbank with a broad technical cooperation package focused
on strengthening its capacity for micro- and small business lending and increasing the operational efficiency of its branch network.
The EBRD's Usov says that the multinational lender could have an interest in eventually becoming a shareholder of Oschadbank; however, its possible share is "a subject for future negotiations".
The governor of the National Bank
of Ukraine (NBU) Valeriya Gontareva publicly stated that the ministry’s
they are taking the pledge seriously. If Kolomoisky and Bogolyubov are able
to successfully restructure 75% of the portfolio, the NBU will consider the pos- sibility of extending the restructuring for the remaining 25% until late 2017, NBU officials told bne IntelliNews.
According to the central bank, some shares of PrivatBank could be offered to potential investors in three to four years. "This may seem ambitious but it could be possible," McNamee says. "Of course the problem will be in finding investors interested in a bank that currently has
“The problem will be in finding investors interested in a bank that currently has such severe problems”
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