Page 44 - BNE_magazine_07_2020

44 I Eastern Europe bne July 2020
Ukraine's state-owned PrivatBank is under legal assault by its former owner oligarch, Ihor Kolomoisky, but it is making steady progress. And after the new team took over, as a business it is already one of the most profitable banks in Europe.
INTERVIEW:
PrivatBank under attack but on the mend
Ben Aris in Berlin
In 2016 the National Bank of Ukraine (NBU) nationalised PrivatBank,
the largest privately owned bank in the country, after a $5.5bn hole was discovered in its balance sheet. Today
it is one of the most profitable banks in Europe thanks to the restructuring its new management has put in place.
But the bank’s troubles are not over. The former owners of the bank, oligarch Ihor Kolomoisky and his partner Gennady Bogolyubov, have launched a Blitzkrieg of legal cases against the bank and the regulator to try to undo the nationalisation.
PrivatBank has responded by launching its own cases in London and Cyprus, and is fighting a running battle against cases brought in Ukraine by the two oligarchs and their proxies. In parallel, it was reported last month that the US Grand Jury has opened an investigation into Kolomoisky for laundering over $600mn
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through US property deals in a five-year- long spending spree and other scams.
The bank is so big, the amount of state money spent on it so large and its role
in the economy so important that the International Monetary Fund (IMF) explicitly linked the $5bn Standby Agreement (SBA) agreed on June 9 to the passage of the so-called anti-Kolomoisky banking law that was signed on May 18 and which makes it impossible for the government to return a bank to its former owners if it has been nationalised. The fight the Zelenskiy government had to get the law passed nearly scuppered the SBA deal, without which Ukraine would have almost certainly faced default on its debt and an additional decade of economic misery.
The banking law passed. The crisis was averted. And PrivatBank is making slow progress in the legal battle with Kolomoisky. But the war is a long way from being over.
PrivatBank ordered to reimburse Surkis brothers
On the day of an interview with bne IntelliNews the General Prosecutor's office in Kyiv summoned PrivatBank's management to its offices and demanded to know why the bank has not repaid UAH1bn ($250mn) to Surkis brothers' offshore companies, following a court order demanding the bank reimburse the businessmen for deposits they lost during the nationalisation in 2016.
PrivatBank has argued that the two men, both business associates of Kolomoisky, were related parties and despite overwhelming evidence of business ties between Kolomoisky and the Surkis brothers, the courts ruled they were independent and innocent victims of the regulator’s decision to take the bank over and bail-in depositors’ money.
The General Prosecutor sent a summons to all members of the bank's board from