Privatbank announces resignation of its CEO

Oleksandr Shlapak, the CEO of Ukraine’s biggest financial institution Privatbank (PRBANK) has submitted his resignation request to the supervisory board, the bank reported in a June 26 press release. “Shlapak has fully completed the tasks of stabilizing the situation at the bank and auditing its finances. He plans to finish his anti-crisis tenure as chairman,” the bank reported.

Commenting on the news, Yakiv Smoliy, the acting chairman of Ukraine’s central bank (NBU), said that “Shlapak confirmed the bank’s credibility by ensuring its smooth operation,” according to an NBU press release. The key task for Shlapak’s successor in Privatbank will be to develop its strategy and to prepare it for “future equity participation by international strategic investors” and “clear the bank’s balance sheet of toxic assets,” Smoliy said.

Shlapak was appointed Privatbank’s CEO in late December after the bank was declared insolvent and nationalized.

Alexander Paraschiy: Shlapak positioned himself as a crisis manager and it seems like he set as his main goal to make the transition smooth from a private bank to state bank, with minimal operating damages and without frightening the bank’s depositors. Importantly, Shlapak managed to avoid conflicts with the bank’s old and new shareholders.

The bank’s next life stage could be more challenging and may lead to an active conflict between the state (Privatbank) and the bank’s former shareholders. We believe Shlapak was aware of this and may have wanted to avoid this phase. On July 1, the grace period expires for when the bank’s former shareholders can restructure or repay their debts to Privatbank, according to the NBU. After the end of this grace period, the bank’s new CEO will have to take the role of a collector of debts from previous shareholders.

Now it looks like former shareholders are not going to repay much loans. In our view, if the government is indeed going to fight with the former shareholders for recovery of over UAH 150 bln of related party loans (according to NBU statements), it should appoint a more hawkish CEO. If that doesn’t happen, it will indicate that the government is not willing to fight.