The National Bank of Ukraine nationalized and bailed in oligarch Ihor Kolomoisky’s troubled PrivatBank in 2016. As part of this process, the NBU converted Cypriot company Triantal Investments Ltd’s shares into capital for the newly nationalized PrivatBank.
But Triantal, which was one of PrivatBank’s largest shareholders, filed a complaint.
Kyiv District Administrative Court has now ruled in Triantal’s favor and annulled the NBU’s conversion of company assets. Kolomoisky owns a 16.5 percent stake in Triantal.
The central bank is worried about the consequences of the ruling.
“The National Bank is concerned by the quality and outcome of this litigation in Ukraine, which might lead to the loss of taxpayer funds and (increased) risk for the banking and financial stability of the country,” Viktor Grigorchuk, NBU’s chief lawyer, said in a statement.
“This might lead to the people associated with the bank’s former shareholders having the basis to demand funds that the government returned to the bank during the process of its nationalization.”
Grigorchuk said that the district court’s decision is not yet binding and will be appealed against.
This ruling comes after Kolomoisky’s victory at the same court the day before, when judges ruled that the NBU had had insufficient legal grounds to declare PrivatBank insolvent in 2016. Kolomoisky has been fighting for years for a return of the billions he claimed he had lost due to the nationalization.
The NBU announced it would appeal once it received a copy of the ruling of the Kyiv District Administrative Court. Rather oddly, the same court in September 2018 recognized the legitimacy of the NBU’s decision to declare PrivatBank insolvent.
PrivatBank was nationalized and bailed in when it was found to have an over $5.5 billion hole in its ledger, allegedly moved out by Kolomoisky and his business partner Gennadiy Bogolyubov, via fraudulent schemes.
Kateryna Rozhkova, the first deputy head of the NBU, said that the cancellation of PrivatBank’s nationalization doesn’t necessarily mean that it will be returned to its former owners. There are also no grounds for the reimbursement of funds to them, she said, given that at the time the bank was declared insolvent, its capital was negative.
