Ministry of Finance of Ukraine statement on additional capitalization of PJSC CB "PrivatBank"

6/23/17

Today, during a special extraordinary session, the Cabinet of Ministers of Ukraine has decided to increase the capital of PJSC CB "PrivatBank" in the amount of UAH 38.5 billion.
The decision was made based on the proposal of the National Bank of Ukraine, taking into account the recommendations of the Expert-Analytical Council on State participation in the capital of banks and the conclusion of independent auditor Ernst&Young.

The auditor's conclusion attests that the bank was in a worse condition than it was considered at the moment of the bank's transfer into state ownership. The audit conclusion suggests that the bank has to form additional reserves to cover losses from credit operations. Consequently, being a shareholder, the State is forced to support the bank with additional capital in order to ensure proper functioning and development of the bank.

The process of additional capitalization will be carried out in two stages. Domestic government bonds will be issued in exchange for the bank’s shares. During the first stage, it is planned to issue domestic government bonds in the amount of UAH 22.5 billions.

There will be no monetization of these bonds, therefore, the additional capitalization of the bank will not affect the exchange market and the level of inflation.

On 18th of December 2016 the Cabinet of Ministers of Ukraine following the National Bank's proposal decided to enter into the capital of PJSC "Privatbank".

According to this decision, 100% of the bank's shares belongs to the State represented by the Ministry of Finance.
The decision on the nationalization of "PrivatBank" allowed to protect over 20 million of Ukrainian citizens who kept their money in this bank and used its services. In particular, 3.2 million pensioners and 1.6 million other socially vulnerable citizens. All of them have kept full access to their accounts.
This decision also helped to avoid systemic risks for the banking sector and to maintain financial stability in the country.
At the same time, former owners obliged to restructure loan portfolio of the bank by July 1 to reimburse the losses of the State.

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