Oschadbank awarded USD 1.3 bln for Crimean losses

The International Court of Arbitration in Paris ruled
on Nov. 26 that the Russian government should compensate USD 1.3 bln to
Ukraine’s Oschadbank (OSCHAD), the bank reported the same day. The compensation
is related to the bank’s losses from Russia’s illegal occupation of Crimea
since 2014. The ruling makes Oschadbank the first fully state-owned company
that won compensation from Russia owing to its military aggression against
Ukraine, the bank highlighted, calling upon other state and private entities to
follow in its path.

In its response, the Russian Justice Ministry said
that it does not recognize the ruling, as it believes the court had no
authority to consider Oschadbank’s claim against Russia, the Interfax news
agency reported on Nov. 27.

Recall, another state-controlled company, Naftogaz, initiated in 2017 litigation
demanding in international courts that Russia compensate about USD 5 bln in
losses related to its Crimean assets. In May 2018, companies related to Igor
Kolomoisky, former shareholder of Privatbank (PRBANK) and current shareholder
of Ukrnafta (UNAF UK), won litigation in an international court in the Hague
for Russia’s compensation of over USD 130 mln in losses related to the
occupation of Crimea. On these companies’ claims, a Kyiv court ruled in September to freeze
some of the assets of Ukrainian subsidiaries of Russian state banks.

Alexander Paraschiy: So far, Oschadbank’s award is the biggest among those stemming from
the seizure of Ukrainian assets in occupied Crimea. It’s very unlikely that the
bank will be able to get any compensation soon, but this result is very
positive for the bank’s image. In particular, the bank has now a good
explanation – confirmed by the conclusion of a respected international court –
on why it had to be re-capitalized for USD 1.5 bln by the government during
2014-2017. We do not expect any bond market reaction to this news, while at the
same time remaining positive about OSCHAD Eurobonds.