Court freezes Russian state banks assets in Ukraine on Kolomoisky claim

The Appellate Court of Kyiv ruled on Sept. 5 to freeze
the shares of three Ukrainian subsidiaries of Russian state-owned banks,
Prominvestbank, VTB and Sberbank, the finbalance.com.ua news site reported on
Sept. 12. The court also resolved to prohibit the banks from alienating any
fixed assets they hold. The ruling was based on the claim of 17 companies and
one person (identified by finbalance.com.ua as companies close to Ukrainian
tycoon Igor Kolomoisky) that lost their assets in Crimea following its
occupation by Russia in 2014.

The claimants won litigation against the Russian
government in the International Arbitration Court in the Hague in May 2018,
where the court awarded them USD 130 mln in compensation for lost property in
Crimea, plus accrued interest since 2014.

The Ukrainian subsidiaries of Russian state-owned
banks have hit hard times since the Russian aggression began against Ukraine in
2014 as their outlets suffer from political vandalism, their debtors often
refuse to service loans and the government imposed sanctions against them in
March 2017. On top of that, several attempts of Russian owners to attract
potential buyers of the banks have been rejected by Ukraine’s central bank.

Alexander Paraschiy: The freezing order of the Kyiv court is rather unexpected, as logic
suggests the Ukrainian subsidiaries of Russian state-controlled banks are not
property of the Russian government. Therefore, it is likely that the court
ruling will be overturned by a higher court. In any way, this will complicate
the operations of the targeted banks, but it only slightly increases the low
chance that Russian authorities will obey the Hague court ruling and pay
compensation.