Supreme Court affirms NBU had no grounds to declare Bakhmatyuk bank insolvent

Ukraine’s Supreme Court ruled on June 17 to reject an
appeal of the National Bank of Ukraine (NBU) against the rulings of lower
courts that declared invalid the NBU’s recognition as insolvent of Finansova Initsiatyva Bank in
June 2015, Ukrlandfaming (UKRLAN) reported on its website the
next day, citing owner Oleg Bakhmatyuk. Recall, Finansova Initsiatyva was the
second bank owned by Bakhmatyuk that was recognized insolvent, after VAB Bank in November 2014.

Commenting on the ruling to Interfax-Ukraine on June
19, Bakhmatyuk said he believes the NBU might still appeal to the Grand Chamber
of the Supreme Court, but said he expects this won’t change the result. He
promised to demand compensation for the bank, based on the recently adopted IMF-required banking law.
At the same time, he said his offer to settle debt issues with the NBU and the
Deposit Guarantee Fund remain on the table.

Recall, in November 2019, Bakhmatyuk claimed that he
had been close to reaching a deal, under which he would repay up to UAH 8.5 bln
of debt of his two failed banks to the state bodies in eight years. Now Bakhmatyuk
is out of Ukraine, while the National Anti-Corruption Bureau is investigating
his involvement in alleged conspiracy aimed at misappropriating a
refinancing loan taken by VAB Bank in 2014.

Alexander Paraschiy: The NBU provided no comments on the recent ruling, but it is apparent
that it will try to appeal it. It is not much likely that the NBU will succeed,
as well as it is unlikely that Bakhmatyuk will be able to get any compensation
for his possible losses in the bank. In any case, the recent ruling gives some
more arguments for Bakhmatyuk in the negotiations on debt settlement with state
bodies, but does not increase much the chance that such a settlement will
happen. All in all, the ruling is unlikely to affect the business of
Bakhmatyuk’s troubled assets, Ukrlandfarming and Avangardco (AVINPU, AVGR LI).