Officials adjusting bill to prevent Privatbank denationalization

Officials with the National Bank of Ukraine are
working with the cabinet and parliament to adjust a bill aimed at preventing
the return of failed banks to their former shareholders, the NBU said in a Feb.
17 statement, an initiative that particularly applies to Privatbank. The
changes are aimed at conforming the legislation with IMF requirements for
launching a new EFF loan program, the NBU said.

The draft law was initially submitted to parliament in mid-December.
It prohibits the return of any bank recognized as insolvent to its former
shareholders, even in case a court rules that the bank was unlawfully declared
insolvent. It limits the compensation of former shareholders to the size of the
bank’s equity.

Among the key aims of such legislation is to prevent
the denationalization of Privatbank, which was recognized insolvent and taken
under control of the government in December 2016. Recall, the bank’s former
shareholders are appealing to various courts to reverse the insolvency ruling
and subsequent nationalization.

Alexander Paraschiy: The NBU’s
statement confirms our consistent position that the legislation related to
Privatbank is a core demand from the IMF for resuming cooperation (the
so-called prior action).

Yet the timing of approving the legislation remains
unclear since the parliament has been mired in reviewing amendments to the
highly contested legislation launching the farmland market. In the first three
working days on that bill, including Feb. 18, parliament was only able to
review 483 proposed amendments out of 4,018 total. At such a pace, parliament
will be busy with the farmland bill until at least late April, and we see no
signs of that improving. This reaffirms our expectations that an IMF deal won’t
be possible before May 2020.