Ukraine ready to defend bail-in of Privatbank boldholders, Gontareva says

The bail-in of Privatbank (PRBANK) Eurobond holders was implemented in accordance with Ukrainian legislation adopted in agreement with the IMF and World Bank, National Bank of Ukraine (NBU) Head Valeria Gontereva said on Jan. 26, as reported by Interfax-Ukraine. “This is a statist position and we will defend it. I see no problem in meeting these investors in court,” she said, adding, “It’s the right of investors to complain, and it’s our right is to prove that they are professional investors and should not rely on the money of taxpayers.” She added that professional investors should have taken interest in the performance of their investments, and that they should ask (Privatbank leading shareholder) Igor Kolomoisky where the missing funds are.

In other news, Privatbank issued a Jan. 26 press release stating that it has restored in full the accounts of Cargill. “We have reached agreement with Cargill for cooperation with the bank,” the release said.

Recall, Privatbank was recognized insolvent on Dec. 19 and was nationalized on Dec. 21. Before the nationalization, the bank’s temporary administrator bailed-in UAH 29.4 bln in obligations, which included USD 555 mln in Eurobonds. The Ukrainian media also reported that some of Cargill’s loans were also bailed-in.

Alexander Paraschiy: The NBU, de jure, did not bail in Privatbank creditors, so it will hardly bear any responsibility for that. However, as we mentioned in our Dec. 27 note, the NBU issued a series of messages in 2015-2016 with misleading information about the true situation in Privatbank, thus having misinformed professional investors.

The case of Cargill’s possible bail-in was not clarified after yesterday’s message from Privatbank. All we know so far is that Cargill’s accounts in Privatbank are safe (as we understand it, that could be current and/or deposit accounts), but the fate of Cargill’s possible loans to the bank is still unclear.