The National Bank of Ukraine keeps providing large amounts of refinancing for banks that have faced a significant deposit outflow as the country goes through the deepest political crisis of its history.
VAB Bank owned by agricultural mogul Oleg Bakhmatyuk, received a $84 million refinancing package from the National Bank after its clients massively withdrew their deposits, bank’s chief executive officer Denys Maltsev told the Kyiv Post.
“Like many other large banks who had problems in a current uncertain situation, we asked NBU for help two weeks ago. National Bank governor Stepan Kubiv held a meeting with bank’s majority shareholder Oleg Bakhmatyuk”, explained Maltsev.
In order to provide a package of financial support, Kubiv demanded Bakhmatyuk’s participation in improving poor financial state of VAB. Therefore, Bakhmatyuk placed $42 million on a deposit account in VAB receiving part of bank’s loan portfolio as a collateral.
Oleg Bakhmatyuk, the country’s 15th richest businessman with a fortune of $600 million and owner of Ukrlandfarming agriculture giant, acquired the 67 percent stake in VAB in 2011, increasing it to 87 percent as for now.
VAB holds 17th position in the list of Ukraine’s biggest banks in terms of the assets. VAB had assets worth $222 million as for October 1, 2013 and book value of $143 million. Its net profit for 2013 was at $0.22 million. In June it has to repay $113 million eurobond.
The central bank provided Ukrainian banks with some $1.82 billion of refinancing since Kubiv was appointed regulator’s chairman on February 24.
According to Hubs news website, country’s largest bank – Privatbank founded by current Dnipropetrovsk Oblast governor Igor Kolomoisky – received near $700 million, multimillionaire Mykola Lagun’s Delta Bank – $340 million, state-owned Ukrgazbank – $84 million.
Timothy Ash, head of emerging market research at Standard Bank, emphasized the necessity of private sector involvement in the Ukrainian bailout projects.
Previous National Bank governors – Sergiy Arbuzov and Igor Sorkin – have been heavily criticized for the non-transparent procedure of refinancing the banks which served as an instrument of spreading loyalty to the government of Viktor Yanukovych and Mykola Azarov among bankers.
However, so far the National Bank has not started officially disclosing the figures on refinancing the banks.
According to the measures introduced by the National Bank, regulator provides banks with financial aid according to the scale of deposit withdrawals. To avoid the raise of currency speculations, interest rate for such a refinancing is at 19.5 percent instead of regular 6.5 percent, Kubiv explained in his interview with Vesti.Reporter weekly magazine. Minimum interest rate for banks’ loans for businesses stands at 20-22 percent, while private persons borrow money at 28 percent mean rate.
Meanwhile, fraudulent oligarch Serhiy Kurchenko’s Brokzibnesbank and Real Bank as well as member of parliament Vadim Novinsky’s Forum Bank had the insolvency administration introduced by the central bank. The regulator made a decision not to provide full bailouts automatically for these entities.
Kyiv Post staff writer Vladyslav Golovin can be reached at [email protected].
