At this important moment for the future of Ukraine, the following is worthy of special emphasis:
- Today, PrivatBank is the biggest and most profitable financial institution in the country, with 22 million Ukrainians as its customers. The bank operates in a transparent and stable manner, comprehensively fulfilling its obligations to clients.
- Yet only two years ago, the state was forced to save the bank in order to maintain the financial stability of the entire country. This bailout cost Ukraine UAH 155 billion in taxpayer money.
- The nationalization of PrivatBank was a necessary step that took place in accordance with the current legislative framework and was supported by the National Security and Defense Council and the Government of Ukraine. The only alternative to nationalizing PrivatBank was its liquidation, which was not an option in view of the bank’s importance for the financial system. Returning the bank to its former owners through the reversal of nationalization is impossible.
- The bank was declared insolvent as a result of large-scale fraudulent schemes, which caused the bank to suffer a loss of at least USD 5.5 billion. Recovering these funds and holding those guilty accountable is the responsibility of the bank and one of the conditions stated in the Memorandum on Cooperation between Ukraine and the International Monetary Fund.
- The Ukrainian people are the sole shareholder of PrivatBank. We are determined to protect the interests of the bank's shareholders under any circumstances, relying on our mandate, Ukrainian legislation, and the rule of international law, and with the support of the international community and the civil society of Ukraine.
For reference: Grounds for state participation in the capital of PrivatBank
The decision on nationalization of CB PrivatBank PJSC and other decisions in this regard were prepared, coordinated, and approved at the state level by the government authorities involved, in strict accordance with Article 41.1 of the Law of Ukraine On Households Deposit Guarantee System (hereinafter referred to as the “sequential decision making”).
This decision protected interests of more than 20 million of people that were clients of the bank and used its services, in particular, 3.2 million pensioners and 1.6 million of vulnerable social groups. All these people retained access to their accounts.
The decision also helped avert systemic risks for the banking sector and paved the way to maintaining financial stability in the country.
The bank had growing issues for many years that aggravated in 2016. Imprudent lending policies pursued by the bank became the leading cause to capital losses.
Over two years, the NBU had been negotiating development and implementation of a capital increase plan with the shareholder. Yet, the plan was not implemented.
Shareholders sent to the Cabinet of Ministers of Ukraine a request to the state to become a participant in the capital of PrivatBank. In the request shareholders warranted to restructure corporate loans issued by the bank with consideration to requirements of the NBU until 1 July 2017.
Being aware of all the issues of PrivatBank PJSC and considering the significance of this systemically important bank for the soundness of financial sector and the national economy as a whole, the NBU classified the bank as insolvent. The NBU approached the government with a proposal to transfer the ownership of this systemically important bank to the state.
At a meeting held on 18 December 2016, the Cabinet of Ministers of Ukraine approved the decision on state participation in the capital ofPrivatBank. According to this decision, 100% of the bank's shares belong to the state represented by the Ministry of Finance.
For reference: Sequential decision making on nationalization of PrivatBank
16 December 2016
Shareholders have send to the Cabinet of Ministers of Ukraine a request to the state to become a participant in the capital of PrivatBank.
18 December 2016
The National Security and Defense Council of Ukraine made the Decision On Urgent Measures to Be Taken to Safeguard the National Economic Security of Ukraine and Ensure the Protection of Depositors' Interests.
The Cabinet of Ministers of Ukraine informed on transferring the ownership of PrivatBank PJSC to the state and approved the respective decision.
19 December 2016
The President of Ukraine signed Decree No. 560/2016 on the Decision of the National Security and Defense Council of Ukraine On Urgent Measures to Be Taken to Safeguard the National Economic Security of Ukraine and Ensure the Protection of Depositors' Interests dated 18 December 2016.
Joint statement of the Ministry of Finance of Ukraine and the National Bank of Ukraine on the approval of the state participation in the capital ofPrivatBank PJSC.
The Deposit Guarantee Fund announced the commencement of PrivatBank PJSC withdrawal from the market.
21 December 2016
The Deposit Guarantee Fund informed on executing the agreement with the Deposit Guarantee Fund on selling 100% of shares of PrivatBankPJSC.
23 December 2016
Implementation of the regulation plan for PrivatBank PJSC: As of 22 December 2016 the provisional administration ceased its functions inPrivatBank PJSC and powers of the provisional administration of PrivatBank PJSC were revoked from the authorized persons of the Deposit Guarantee Fund.