Former NBU head says PrivatBank required no nationalization, could survive on its own

"Yes, absolutely," he confirmed, responding to a journalist's question whether PrivatBank could stand on its own and operate without nationalization if the NBU applied the same approach to the bank in the refinancing issue as it did to other market participants, Finbalance reported.

According to Stelmakh, the NBU representatives worked in PrivatBank during almost the entire period of Valeria Gontareva's service as NBU Governor. Noteworthy, they never officially commented on the bank functioning.

"On December 16, 2016 [that is, a few days before the nationalization], I, as PrivatBank Supervisory Board Chairman, sent a letter to Gontareva with assessment of the bank's financial condition, which noted that the bank maintained a reliable level of stability, adhered to the target solvency and liquidity ratios, and paid significant amounts of taxes," Stelmakh said.

Moreover, the letter specified that the NBU did not always adhere to objectivity and parity in its approach to PrivatBank in comparison with other banks when exercising supervisory functions.

Read alsoPrivatBank selects McKinsey&Company to develop strategy "The regulator imposed restrictions on PrivatBank in attracting deposits, while it provided substantially more liquidity, compared to the outflow of client funds, to banks with state capital," Stelmakh added.

According to his estimates, the total amount of refinancing, which PrivatBank received during the crisis, was UAH 0.43 per UAH 1 of deposit outflows, while it was UAH 1.6 (that is, almost 4 times more) for Oschadbank, and UAH 2.7 for Ukrgasbank. The average monthly refinancing rate for PrivatBank was 17.3% in 2014, 22.8% in 2015, and 22.6% in 10 months in 2016. This figure in the state-run banks was 10.69%, 16.95%, and 13.3%, respectively. PrivatBank's refinancing was designed for three years, while that of the state-owned banks was extended to five years.

Read alsoNationalized PrivatBank boosts net profit by 3.5 times in Q1"Gontareva stated that 99% of PrivatBank's corporate portfolio is loans to related persons, whereas this figure was 6% in the bank's statement, provided by the state management and audited by Ernst & Young. This means that absolutely different goals prevailed in the decision on its nationalization than were declared," Stelmakh said.

As UNIAN reported earlier, on December 18, 2016, the Cabinet of Ministers of Ukraine decided to nationalize Ukraine's No. 1 bank, Dnipro-based PrivatBank, being guided by the recommendations of the National Security and Defense Council of Ukraine.

Before the nationalization, the major shareholders of the bank were businessman Ihor Kolomoisky with a 49.9816% equity share, his partner Hennadiy Boholiubov with 41.5769% stake, and Triantal Investments Ltd. with 16.8170%.

Volodymyr Stelmakh worked as NBU governor and supervisory board chairman from 2000 to 2003 and from 2004 to 2010.