Ukraine has nationalised the country’s biggest bank in a bid to avert a financial meltdown in the war-scarred former Soviet state. The government moved to take over PrivatBank after months of rumours that the lender was heavily burdened by bad debts. PrivatBank controls one-third of the east European country’s bank deposits and even has branches in the Baltic states.
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The Ukrainian government said Sunday in a statement that it was now the “100 per cent owner of PrivatBank and guaranteed the uninterrupted functioning of this institution and the safety of its clients’ money.”
Kiev’s decision falls in line with International monetary Fund’s demands for Ukraine to clean up and stabilise its murky financial sector in order to achieve sustainable growth. It was owned by Igor Kolomoyskiy — a politically powerful billionaire who became an early target of Ukrainian President Petro Poroshenko’s uphill fight against corruption.
The bank has also been the subject of local media reports suggesting it issued loans to select insiders that may never be repaid. That talk alone saw the value of PrivatBank’s bonds fall by nearly 50 per cent in late November. Ukraine’s central bank had wanted Kolomoyskiy to refinance his bank with billions of dollars if he wanted to keep it. But that money never emerged and Kiev’s patience snapped yesterday.