Monday, December 19 2016 20:31 EET
Ukraine
Poroshenko commented on bringing “PrivatBank” into state ownership
Poroshenko, comment, Finance, “PrivatBank”,  state ownership,  IMF, World Bank, EBRD, Shareholders,  financial and economic situation, depositors, banking system.

Proshenko explained the essence of the steps made yesterday and today in respect of “PrivatBank”.

Despite the fact that the case is related to the private banking institution, these decisions are not a private case. They are directly related to approximately half of the adult population of Ukraine - individuals who are clients of this bank. They also concern about 50% of all legal entities registered in Ukraine.

Indirectly, the entire financial and economic situation in the country depends on the financial standing of this bank - that is how big or, as experts say, system-related this bank is.

That is why it cannot be forced into the Procrustean bed of standard bank recovery technologies. Thus, we resort to an unprecedented decision - passing it into 100% state ownership.

The state assumes responsibility and guarantees safety and integrity of funds to the clients of “PrivatBank”.

Our decision is based on saving the bank and guaranteeing property rights to financial resources to everyone who put money in this institution.

Measures taken by private owners and top managers over the past two years have turned out to be insufficient. Problems of “PrivatBank” have been piled up for years. They’ve taken a turn for the worse in conditions of war and economic crisis. Shareholders have not found the resources to perform the compulsory program of additional capitalization, as the current business model has apparently sputtered out.

A direct threat to both the bank itself and the entire banking system of Ukraine has emerged. It is obvious for us as well. Over the past six months serious concern over this issue has been raised by our key financial partners - IMF, World Bank, EBRD.

Thus, it is obvious that the only way to save the bank and ensure safety of its clients’ funds is to bring it into state ownership. Alternative would be irresponsible, for it would mean closing eyes, burying head in the sand waiting for the bank to fall down.

That is why over the past hours, the National Security and Defense Council, National Bank, Cabinet of Ministers and Ministry of Finance have adopted all legal formal decisions on bringing “PrivatBank” into complete state ownership. Those were the decisions that saved both the bank and the banking system.

The new owner is the state acting through the Ministry of Finance. Speaking of former private owners, their responsible position fixed in their letters to the Government and the National Bank is crucially important for us. These letters clearly state that they recognize the necessity and expediency of the extraordinary step and fully support bringing “PrivatBank” into state ownership.

New group of top professionals has already been hired to manage the bank. The process of forming the group has been joined, inter alia, by the European Bank for Reconstruction and Development.

This team, the National Bank and the Ministry of the Interior face the task to ensure gradual transition, stable functioning and service.

First of all, new management must ensure uninterrupted service of socially vulnerable clients. I mean those who live hand-to-mouth, who receive pensions, scholarships, transfer money for treatment etc.

But in general, nobody should suffer from the change of ownership. We’ve made this decision for every client to be protected and avoid problems. And for the money to be in greater safety than ever before.

To increase protection of “PrivatBank” depositors, I have submitted an urgent draft law to the Parliament that provides additional deposit insurance in this institution. They will be exactly the same as those of “Oschadbank” - the bank, which fully belongs to the state.

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