Reuters/ London, Kiev
PrivatBank won an appeal in a London court yesterday that allows Ukraine’s largest lender to pursue claims worth billions of dollars against its former owners.
The case is part of a protracted legal battle between the Ukrainian government and former owners Ihor Kolomoisky and Gennadiy Bogolyubov after PrivatBank was forcibly nationalised in 2016 as part of a clean-up of the country’s banking system.
Ukraine’s dealings with PrivatBank and Kolomoisky, who has longstanding business ties to the new Ukrainian President Volodymyr Zelenskiy, are being watched by investors as a barometer of the country’s business climate.
PrivatBank’s lawsuit against the former owners alleges fraud that it says cost the bank hundreds of millions of dollars. The former owners deny any wrongdoing and say the Ukrainian authorities deliberately misrepresented the state of PrivatBank’s finances when it was taken into state hands in December 2016. Kolomoisky did not immediately respond to a request for comment yesterday.
The London court concluded PrivatBank had a good case to recover $1.9bn, or $3bn including interest, PrivatBank said in a statement.
“This is an important step towards achieving justice for the Bank and the people of Ukraine,” said PrivatBank’s chief executive, Petr Krumphanzl.
A worldwide asset freeze on the former owners’ assets will remain in place while the case is heard, PrivatBank said. The court refused to give the defendants permission to appeal, and required them to file their defence by the end of November, it said.
Ukraine’s dollar-denominated sovereign bonds moved higher in thin trade, with the 2032 issue up 0.5 cents to reach a 2-1/2 week high at 102.79 cents.
The country’s central bank said in a statement the verdict was good news for Ukraine’s economy and taxpayers.
Ukrainian authorities say a $5.6bn hole had been left in PrivatBank’s finances due to lending practices under Kolomoisky’s ownership.
Kolomoisky disputes that and has taken legal action in Ukrainian courts seeking to overturn the nationalisation. “It is very positive for Ukraine that we will see the court case proceed in London, where the judiciary is of a high standard and transparent,” said one fund manager, declining to be named.”However, we still need to wait and see what the decision in the end will be.”
Zelenskiy’s new government has been negotiating a new IMF loan programme to replace a $3.9bn standby agreement that expires at the start of January. But the 41-year-old president has faced scrutiny for his ties to Kolomoisky and repeatedly batted away suggestions he would help Kolomoisky regain control of the bank or win compensation.
Ukraine’s deputy central bank governor told Reuters last week that the issue had stalled talks with the IMF, and warned of the “huge danger” to Ukraine if a Ukrainian court overturned the nationalisation.
In a statement in September, the IMF did not mention PrivatBank or Kolomoisky but said Ukraine needed to tackle corruption, reduce the influence of oligarchs over the economy and minimise “the cost to taxpayers from bank resolutions.”
LEAVE A COMMENT Your email address will not be published. Required fields are marked*
Medium term oil prices trend lower as industry focuses on lowest-cost reserves: Moody’s
Private sector customers lead double-digit deposits growth in Qatar banks
Qatar Airways maintains ‘flexible, agile network’ amid Covid-19 challenges
Boeing cutting more than 12,000 US jobs, thousands more planned
Growing appetite for Shariah-compliant banking, takaful products in Qatar: OBG
Japan eyes new $1.1tn stimulus to combat virus pandemic pain
HKEX CEO calls for confidence in HK’s status as financial hub
Thailand’s parliament urged to pass $60bn virus stimulus bill