Appellate court rules in favor of PrivatBank’s former shareholders

Appellate court rules in favor of PrivatBank’s former shareholders

Ukrinform
On 13 May 2019, the Sixth Appellate Administrative Court rejected the appeal of the National Bank of Ukraine against the ruling of the Kyiv District Administrative Court dated March 2, 2018, that had satisfied the lawsuit filed by the Cyprus-based company Triantal Investments Ltd – PrivatBank’s former shareholder.

"The NBU does not agree with the court’s ruling and intends to file an appeal in cassation.  The procedure and grounds for the conduct of scheduled and unscheduled inspections of banks are stipulated in the relevant Regulation of the NBU. If a bank’s financial standing is found to have materially deteriorated, it gives the NBU grounds to conduct the necessary inspection,” says Viktor Hryhorchuk, Head of Litigation at the NBU Legal Department, the NBU press service reports.

The NBU reminds that it had grounds to inspect PrivatBank in 2016, as the bank had failed to implement the financial rehabilitation program agreed with the bank’s shareholders and management. This is confirmed by the written statement by the bank’s former shareholders and is proof that they failed to meet their commitments.

 “The inspection of PrivatBank before it was declared insolvent and its government-assisted resolution revealed that the bank failed to implement its restructuring plan and that the bank’s capital was insufficient to meet the required capital and credit risk coverage ratios. This conclusion is supported by the paperwork from the inspection and by an independent, internationally recognized audit firm hired by PrivatBank,” the statement reads.

"Appealing the regulator’s decision to inspect PrivatBank is part of a push by the bank’s former shareholders to appeal the entire procedure under which the bank was resolved. Please be reminded that the decision to implement the government-assisted resolution of the insolvent PrivatBank was made in accordance with applicable law and supported by the National Security and Defense Council of Ukraine, the government of Ukraine, and its international partners with the aim to ensure financial stability and to safeguard the funds of the public. The legitimacy of these decisions is obvious, and they cannot be reversed, as there are no legal or economic grounds for such a reversal," Viktor Hryhorchuk added.

The NBU will continue to prove the legitimacy of its actions. Such court rulings pose a threat to Ukraine’s financial stability, the NBU believes.

As reported, the PrivatBank was nationalized pursuant to the decision of the Government of Ukraine in December 2016. It was reported that UAH 110 billion had been withdrawn from PrivatBank through fictitious companies before it was nationalized.

On April 18, 2019, Kyiv's District Administrative Court, having considered at a court session the case on a lawsuit filed by businessman Ihor Kolomoisky to the NBU, the Cabinet of Ministers, the Deposit Guarantee Fund and the National Commission on Securities and the Stock Market, ruled that the nationalization of PrivatBank was illegal. The consideration of this case lasted from June 2017.

Kyiv's District Administrative Court explained its ruling that recognized the nationalization of PrivatBank as illegal by the fact that the defendants, in this case, did not prove the legality of classifying the bank as insolvent.

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