The former Board of PrivatBank issued a statement on the reasons for the nationalization of one of Ukraine`s largest banks. According to a statement, the bank had lost its right to take into account UAH 142.8 billion worth of collateral because of the NBU policy, while the government had initiated a number of information attacks, which led to panic among bank clients.
According to him, the term ”a UAH 148 billion hole” has become a cliche, but it had not been formed as a result of the withdrawal of funds, but of a sharp change in the rules of the game by the NBU.
”NBU has abruptly and, as we believe, unfairly, changed the policy of accounting of collateral. As a result of this change (which, incidentally, takes effect January 1, 2017), our bank has lost the right to take into account collateral worth a total of UAH 142.8 billion. Moreover, this cost was verified by independent appraisers authorized by the National Bank. What is the essence of these changes? The NBU allowed calling a collateral only property that can be mortgaged…” the statement reads.
”One of our borrowers was the company, which, according to independent appraisers, was worth about UAH 6 billion. The borrower owned 75% of the company, while 25% was owned by the state. Thus, the value of collateral amounted to UAH 6 billion* 75% = UAH 4.5 billion. But after the drastic changes of the rules of the game, the collateral was worth nothing,” said the ex-management.
It is noted that according to experts, the NBU has adopted these abrupt changes specifically against PrivatBank.
It is also reported that the information that the bank had granted loans to related entities, and that this was the reason why problems emerged with their return, does not correspond to reality.
”It is important to understand that today almost all Ukrainian companies service their loans poorly. This is because a deep economic crisis has been ongoing in the country for several years. If any Ukrainian company ceased to operate because of the war in the east of Ukraine or halted its exports due to poor market conditions, it ceases to serve their loans regardless of whether it is related to the owners of the bank or not,” the statement reads.
In addition, the National Bank of Ukraine has canceled the internationally-acknowledged definition of related entities and started to refer everyone to this category.
”Our bank was regularly audited by international audit companies of the Big Four. According to the latest report by PricewaterhouseCoopers, the share of the loan portfolio, which in our bank accounted for related parties, was 17.7%. But at some point, the NBU once again decided to change the rules of the game dramatically. The regulator has announced that it wasn`t interested in IFRS, and that it would determine on its own, according to own expertise, which persons the will call ”related entities”,” said the former management.
According to the ex-management, when international standards are rejected, manipulation starts.
”`Experts` from the NBU started to refer to the related companies almost everyone who had one time had dinner with the bank`s shareholders,” reads the statement
The statement also said that the NBU used refinancing, issued to PrivatBank to cover the outflow of deposits, as a tool of pressure.
”Since the beginning of the crisis, our bank received refinancing in the amount of UAH 30.2 billion. When Gontareva became NBU Governor, she raised interest rates to 28-32% per annum! And that is instead of supporting banks during the crisis, as the central banks do around the world. Cynicism also lay in the fact that the refinancing rate was reduced in 2016 for other major banks,” the report says.
The NBU should have lowered the rate for the bank, but it had not done so under various pretexts. As a result, the bank was paying huge interest on the loan, which it had been forced to take during the war, having paid a total of UAH 11.1 billion of the loan and UAH 13.1 interest at the time of the nationalization.
Another reason for the nationalization is that the government has initiated a number of information attacks, which led to a panic among customers.
”Each of these attacks led to an outflow of funds from our bank. The latest attack was provoked by Gontareva, when she brought together leading bankers and experts for a closed meeting and told them that PrivatBank could be nationalize, thus, launching another wave of rumors that the media were happy to pick up on,” reads the statement.
After that, the board has appealed to the Finance Ministry with a proposal for a voluntary transfer of the bank.
”The main postulate. Since coming to power, Gontareva has been implementing a deliberate policy aimed at destroying our bank. In addition to the facts presented in this article, the NBU on a daily basis invented new ways to interfere with our operations. All this time, our team, instead of providing quality services to our customers and dealing with the crisis, had to constantly fend off the hostile regulator,” the ex-management summed up in their statement.