Ukraine sells 99.8% stake in Prominvestbank controlled by Russian state entity

A 99.8% stake in Ukraine’s
Prominvestbank, belonging to Russian state development corporation VEB.RF, was
sold for UAH 269 mln to an undisclosed buyer on March 5, Interfax-Ukraine
reported the same day. The stake was arrested by Ukraine in September 2018 at
the request of companies related to tycoon Ihor Kolomoisky. The companies won
litigation against the Russian government in the International Arbitration
Court in the Hague in May 2018, which awarded USD 130
mln in compensation
for their lost property in Crimea. Proceeds from the sale of the Prominvestbank
stake, which was defined as property of the Russian government, should be used
to partially compensate such losses.

Reacting to sale,
VEB claimed that it will seek for compensation of related losses at the expense
of foreign assets of the Ukrainian government, Interfax-Ukraine reported on
March 5. Earlier this week, the Russian corporation reported the Stockholm
Arbitration Court ruled on March 2 to prohibit Ukraine from the expropriation
and forced sale of the Prominvestbank stake. 

Alexander
Paraschiy: The sale
is an unexpected and illogical move, which will likely lead to the Ukrainian
government facing an international court claim from the Russian corporation,
and likely losing. Moreover, the amount of the VEB claim to the Ukrainian
government could exceed the tender price of the Prominvestbank stake (which we
believe is a fair price).

In this way, VEB – which had increased the share capital of the
Ukrainian bank by over UAH 42.7 bln in 2015-2017 – will have earned more than
UAH 0.27 bln from the bank’s potential sale, thus having left the Ukrainian
market “with dignity”.