Privatbank increases share capital by UAH 2.6 bln

The shareholders of Ukraine’s leading financial institution Privatbank (PRBANK) decided on Aug. 26 to increase its share capital by 12.2%, or UAH 2.58 bln, according to an Aug. 29 press release. The capital increase will occur with a contribution of part of the bank’s retained earnings, according to the release. As a result of the deal, no new shares of the bank will be issued, while the par value of existing shares will increase to UAH 314 from UAH 280, the bank reported.

Alexander Paraschiy: Such a capital increase, without additional contributions from Privatbank shareholders, seems to be a small part of a broad program of the restructuring (recapitalization) of the bank, whose potential capital gap ranges from UAH 15 bln to UAH 128 bln, as was hinted by main shareholder Igor Kolomoisky. As part of the program, the bank repossessed the collateral under its loans at a total estimated value of UAH 31.85 bln in June 2016, and took commitments to obtain additional collateral for a “significant part of loans” by Sept. 1. The latter step, if implemented, should contribute significantly to the bank’s stability. Thus far, given that the real size of Privatbank’s capital gap is not known, we believe the bank’s Eurobonds remain a risky investment.