NBU works to collect UAH 11 bln in guarantees of failed banks owners

Ukraine’s central bank, the NBU, is working to collect personal guarantees from the owners of insolvent banks in a total amount of UAH 11.46 bln, NBU official Ihor Budnik told journalists on Mar. 1, as reported by Interfax-Ukraine.

The most personal financial guarantees were provided by Oleh Bakhmatyuk, who secured refinancing loans for two banks (VAB Bank (VABANK) and Finansova Initsiatyva) amounting to UAH 8.55 bln, according to Budnik. In its legal filings, the NBU has reached its biggest progress in reclaiming guarantees from Bakhmatyuk, according to the news report.

Kostyantyn Zhevago, the owner of insolvent Finance & Credit Bank (FICBUA), provided financial guarantees for UAH 1.45 bln. The bank provided collateral worth UAH 14.6 bln under NBU loans, according to the bank’s 2014 report. Total NBU loans to the bank were UAH 3.9 bln as of end-2014. In 2015, before the bank was declared insolvent in September, it received a new set of loans from the NBU worth about UAH 1.1 bln.

Alexander Paraschiy: This development casts a dark pall over Bakhmatyuk-owned Eurobond issuers, Ukrlanfarming (UKRLAN) and Avangardco (AVINPU). While the NBU claims might not affect the companies directly, they will clearly limit the ability of Bakhmatyuk to support these companies, which are not in the best shape now.

The personal guarantee claim from Zhevago also offers little positives for his related company Ferrexpo (FXPO LN, FXPOLN). Recall, USD 174 mln in Ferrexpo deposits were lost in Zhevago’s Finance & Credit Bank. The fact that the NBU is trying to claim a personal guarantee from Zhevago suggests all the collaterals the bank provided to the NBU do not cover the amount of refinancing. The NBU is fifth in the queue to claim the liabilities of an insolvent bank, while the related party depositors (like Ferrexpo) are ninth in this queue. All this suggests there is practically no chance for Ferrexpo to get anything from the bank.