Page 45 - bne IntelliNews Ukraine Country Report May 2017

Kyiv-based International Investment Bank (IBB), in which Ukraine's President Petro Poroshenko owns a 60% stake, will increase its charter capital by UAH40.5 (€1.7mn), or by 25% to UAH202mn by transferring part of its 2016 profit. The decision was made at a shareholders' meeting on April 13, local media reported on April 25. IIB is Ukraine's 25th largest bank by assets among 93 operating banks in the country as of early January. Ihor Kononenko, Poroshenko's business partner and deputy head of the president's faction in the Verkhovna Rada parliament, owns a 14.9% stake in the bank.
Russia’s largest bank Sberbank officially announced leaving the Ukrainian market on April 7 , citing “sanctions of the National Bank of Ukraine, and consistent and aggressive actions from the National Sector” as the main reasons to sell its Ukrainian business. The lender's exit marks another step in the collapse of relations between Russia and Ukraine since the pro-Moscow regime in Kyiv was ousted in protests in 2014. Four other Russian state-owned banks in Ukraine are also expected to scale down or shut their operations as pressure on them mounts. Sberbank is selling its Ukrainian business at the price below capital, the CEO of the bank German Gref said on April5,withoutdisclosingtheamount. Accordingtopreviousreports, theprice paid by Latvian Norvik Bank and an unnamed Belarusian private company is $130mn.
The Ukrainian SBU security service on April 26 raided the Kyiv offices of Dragon Capital , one of the country's largest investment companies that is controlled by Czech businessman Tomas Fiala and has Goldman Sachs as a minority shareholder. Established in 2000, Dragon currently accounts for the largest share of turnover on the Ukrainian stock market, carrying out approximately a third of reported transactions. Dragon's spokesperson Olha Bilobrovska said the raids were linked to charges of unlawful use of software. Bilobrovska denied any wrongdoing by the company, which she said had legally bought its software. Later the same day, Dragon's Fiala accused law enforcers of trying "to discourage [Dragon's] fight" for the implementation of a ruling of the London Court of International Arbitration regarding the Sky Mall shopping centre in Kyiv.
8.2 Central Bank policy rate
The board of directors of Ukraine’s central bank (NBU) decided on April 13 to cut its policy rate by 1.0pp to 13.0%, according to its press-release.
March inflation was 15.1% yoy, lower than the 16.4% yoy growth that was projected, while the hryvnia remained stable at the ForEx, the NBU said.
No impact of the govenrment's trade blockade was detected on CPI , the NBU said. Current tendencies promise consumer prices will increase 9.1% YTD in 2017, which is in line with the NBU's initial target range of 8% +/- 2%. As a result, the board expects to perform further monetary easing, possibly at its next meeting on May 25.
A decision on a policy rate cut was an expected event, taking into account a flow of positive news – the IMF wire, no trade blockade impact, the stable hryvnia. On the other hand, inflation still remains high and the NBU head's resignation might have pointed to a flat policy rate till her successor arrived.
45 RUSSIA Country Report April 2017 www.intellinews.com