Supreme Court takes break in Surkis Privatbank bail-in case

The grand chamber of the Supreme Court of Ukraine
decided to take a break for preparing its verdict on the
case involving the December 2016 bail-in of Surkis family deposits in
Privatbank (PRBANK), Interfax-Ukraine reported on Mar. 17. The court hearing on
the case lasted over nine hours on Mar. 16, with the next session to be
announced later.

Recall, after Privatbank was recognized insolvent and
before it was nationalized in December 2016, the government converted into the
bank’s equity (bailed in) UAH 29.4 bln of the bank’s liabilities to about 100
related parties, which included members of Surkis family (about UAH 1.1 bln)
and all the bank’s Eurobonds (USD 555 mln). The Surkises appealed the bail-in
in local courts, and both the first-tierand the appellate court ruled in
favor of the family. Following a second-tier court ruling in November 2017, the
bank repaid the funds to the Surkises and filed an appeal with the Supreme
Court.

Alexander Paraschiy: The Supreme
Court ruling on the Surkis case will be important for the other lawsuits in
which the former owners of Privatbank, including Ihor Kolomoisky, are
challenging the entire process of recognizing Privatbank as insolvent and its
nationalization. Meanwhile, the IMF is demanding that Ukraine adopt a special
law that will prevent the return of Privatbank (and any other banks that were
recognized as insolvent) into the hands of its former owners. The adoption of
this law is the main precondition for the IMF to initiate a USD 5.5 bln loan
program for Ukraine.

It is highly likely that the Supreme Court verdict
will be in favor of the Surkises, so the latest postponement enormously
benefits Ukraine’s relationship with the IMF. At least, parliament now has some
more time to adopt the bill that will prevent the denationalization of Privatbank,
thus diminishing the key financial risk for Ukraine.