U.K. Supreme Court rejects latest appeal by Privatbank former owners

The Supreme Court of the U.K. rejected on Apr. 6 an
appeal, filed by Privatbank’s former owners, against an October ruling of the
Court of Appeal that affirmed the jurisdiction of High Court in London to hear
Privatbank’s fraud and conspiracy claims, the bank reported on Apr. 7. “There
is no further avenue for appeal available … and the bank’s claims will
therefore proceed to trial in the English High Court,” the bank wrote in a
press release.

Recall, Privatbank (PRBANK), which was recognized
insolvent and nationalized in December 2016, filed a USD 1.9 bln claim against
its former owners (Ihor Kolomoisky and Gennadiy Bogolyubov) with the High Court
in London for USD 1.9 bln, claiming they had fraudulently misappropriated the
funds on the bank. Later on, the value of claim swelled to USD 3.0 bln. The court decided in December 2018
that this claim is beyond its jurisdiction, but in October 2019, the Court of Appeal overturned that decision,
thus confirming the jurisdiction of the High Court in London. Now that the
Supreme Court affirmed this, the case will be heard in London.

Alexander Paraschiy: In its
December 2018 ruling, the London court already stated that “there is no
difficulty with the bank proving a good arguable case of a fraudulent scheme,”
meaning that the bank and its new owner, the Ukrainian government, have a solid
chance for victory in the U.K. This again raises the amount of the potential
bill for Kolomoisky and his partners, meaning they are likely to grow more
aggressive in lobbying the return of Privatbank under their control, seeking
favorable decisions from Ukrainian courts. The key impediment to their goal is
the IMF-required law on banking resolution (the so-called ant-Kolomoisky law),
which is currently being prepared for its second reading in the parliament.

These rising stakes in the fight for Privatbank
have already reduced the chance for the bill to be approved this month, and in
turn decreases the likelihood of IMF and other IFI support for Ukraine arriving
soon. Nevertheless, we continue to consider the bill’s approval and smooth
cooperation with IFIs as the base-case scenario for Ukraine.