Privatbank files response to Eurobond holders claim in London

Ukraine’s nationalized financial institution
Privatbank (PRBANK) has sent its response to the claims of the holders of its
Eurobonds to the London Court of Arbitration, according to its exchange
announcement on Jan. 17, providing no other details. Recall, a trustee of the
bank’s senior notes filed an acceleration request
on Nov. 2 and initiated an arbitration hearing in London
against the notes’ bail-in on Nov. 8. The deadline for the bank to submit its
response to bondholder claims was initially Dec. 6 and was later postponed till
Jan. 17.

Privatbank was declared insolvent and nationalized in
December 2016.  Since then, the bank got an additional capital injection
in the total amount of UAH 184.7 bln (USD 7.0 bln). Of this amount, UAH 29.4
bln (USD 1.1 bln) was drawn from the bailed-in liabilities of the bank,
including USD 0.55 bln of the bank’s senior and subordinated Eurobonds.

Alexander Paraschiy: Most
likely, the response from the bank and the Ukrainian government in justifying
the bail in will be based on the “no creditor worse off” (NCWO)
principle. In oarticular, they will try to argue that the bondholders wouldn’t
have received any more compensation if the bank had been liquidated. The
bondholders’ strong point could be precedents in the Ukrainian courts in which
several high-profile bailed-in depositors of the bank managed to overturn their
assets being written off. At this stage, it is hard to estimate the chances for
any party to succeed in the litigation.