EBRD confirms its intention to enter into Oschadbank equity

Suma Chakrabarti,
the president of the EBRD, confirmed the institution’s intention to buy a
minority stake in Ukraine’s state Oschadbank (OSCHAD), according to media
reports on May 25. “The time has come for the EBRD to continue working and take
a stake in Oschadbank,” Chakrabarti told a meeting of the Ukraine Investment
Council, as cited by Interfax-Ukraine. He mentioned no specific date for such
an investment.

Recall, the
Ukrainian government announced a state bank management strategy in February
that foresees selling a 20% stake in Oschadbank to an international financial organization
in 2020, as well as offering a 25% stake in the bank to the public in 2022. Two
weeks ago, Ukraine’s central bank confirmed a capital increase in Oschadbank by
about UAH 5 bln in 2018, the finclub.net news site reported on May 15.

Alexander Paraschiy: Should EBRD acquire a 20% stake in
Oschadbank, its share capital could increase by as much as UAH 12.4 bln, which
is more than the bank currently needs. However, we do not expect the EBRD will
invest into Oschadbank equity this year. Most likely, it will happen in 2020,
in line with the government’s presented strategy. Meanwhile, it seems like the
bank is not ready for such a “partial privatization.” In particular, an
important component of the government strategy – approval of legislation to improve
state banks’ corporate governance – failed in
parliament in
March.

Therefore, it looks like the nearest capital contribution to the bank
will be made in the standard way of issuing state bonds to replenish the bank’s
equity. Nevertheless, we remain bullish on OSCHAD bonds, which deserve to be
traded on par with the sovereign curve, in our view.