MinFin completes UAH 16 bln capital increase of Privatbank

Ukraine’s Finance Ministry announced on Dec. 26 it
completed a UAH 16 bln capital increase of the nation’s biggest financial
institution Privatbank (PRBANK). This was the second stage of a UAH 38.5 bln
capital injection initiated by the Cabinet on June 23.
At the first stage, the bank’s equity was increased by UAH 22.5 bln, and there
was a chance that the second stage wouldn’t be necessary had the bank been able
to more efficiently work with its bad loan portfolio.

Recall, the bank was recognized insolvent on Dec. 18,
2016 and was nationalized afterwards. To bail in the bank, the government
contributed UAH 116.8 bln into its equity and bailed-in creditors had to
contribute another UAH 29.4 bln in December 2016.

Alexander Paraschiy: With the
latest capital injection, the government’s total contribution to Privatbank
equity since December 2016 has amounted to UAH 155.3 bln. The bank’s total equity
boost since 2016 (including the “contribution” of the bailed-in creditors) is
UAH 184.7 bln, or almost USD 7 bln. This amounts to over 7% of Ukraine’s GDP
and about 2/3 of the bank’s total assets before the nationalization.

It might happen that this capital injection won’t
be the last. In case the bank and the government continue losing court battles
against the bail-in of creditors, the government will have to contribute even
more to the bank. And this likely won’t be the last capital contribution to a
state-controlled bank in the coming months. Most likely, the government will
have to contribute additional equity to another asset, Oschadbank (OSCHAD), as was hinted earlier by MinFin and the central bank.