The Council of the National Bank of Ukraine issued a reprimand and a statement of no confidence to deputy governors Kateryna Rozhkova and Dmytro Sologub for talking to the media.
NBU Governor Kyrylo Shevchenko voted in favor of the reprimand, news agency Interfax-Ukraine reported, citing an anonymous source in the central bank.
According to the central bank’s press service, the deputy governors violated NBU regulations and the employee code of ethics.
Rozhkova said that the Oct. 2 vote was explicitly triggered by comments she made to the Kyiv Post during a 45-minute interview about the NBU’s independence.
In that interview, she and Sologub said that the central bank’s independence is ensured by a collegial decision-making process and that its policies helped Ukraine’s economy stay relatively stable during the COVID-19 crisis. The article also cited banking insiders who criticized the NBU Council for interfering in the central bank’s reforms.
Sologub’s interview with Interfax-Ukraine also played a big role. Sologub had said that the NBU now has to rebuild the International Monetary Fund’s trust from zero and Ukraine has practically returned to the year 2015, before major banking reforms were implemented. The possibility of securing IMF tranches before the end of the year has been lost, according to him.
“Don’t believe that in 2020, they could issue a reprimand for talking to the media? I also didn’t fully believe that censorship has reached the walls of the National Bank,” Rozhkova wrote on Facebook.
“But why be surprised when the decision was made… behind closed doors, without explaining the reasons or hearing the parties involved?”
According to Interfax-Ukraine, NBU Council member Vitalii Shapran introduced the reprimand and no-confidence motion — seven council members voted for, one against and one abstained. Shevchenko, who is also a member of the council, voted in favor, Interfax-Ukraine reported.
Timothy Ash of Bluebay Asset Management said that Smolii would have defended his team.
“Shevchenko talks about defending central bank independence, well now he needs to stand up and reveal if his words mean anything at all or is his new model for the NBU a ‘power vertical’ with all decision making centralised,” Ash wrote.
Reached by phone, Shapran asked the Kyiv Post to send him questions via Facebook, which he will answer later.
In a Facebook comment of his own, Shapran denied that anyone is trying to force Rozhkova and Sologub to resign.
“In my opinion, the decision of the NBU council was purely disciplinary (pedagogical),” he wrote.
However, he implied that Rozhkova and Sologub are sabotaging the NBU. “I hope that in 10-15 years, we will live up to the best European standards so that when the team changes, the dissenters resign and don’t stay on to do sabotage and other unpleasant things from the inside.”
Shapran added that the NBU’s corporate governance has made major strides, because “in the wild 1990s, some board members would simply be met in the entrance of their own homes,” he wrote, referring to assassination. “Nowadays they’re treated more tolerantly.”
Rozhkova wrote that given the volume of threats she receives, Shapran’s comments can be taken in multiple ways.
It’s not clear what the reprimand means for the deputy governors’ future at the NBU. The bank’s legal department is working on it.
But Rozhkova did call it “a triumph of the past over the future” and “an alarming signal for National Bank independence and common sense.”
Rozhkova and Sologub are the last remaining members of the old six-person leadership team.
Bohdan Danylyshyn, head of the NBU Council, openly opposes them and wants them gone. Last month, he wrote that they should stop clinging to their positions.
The old team rankled many feathers by taking 100 insolvent banks off the market. Many politically connected people wanted them out.
Former NBU governor Yakiv Smolii resigned in June due to “systemic political pressure.” Since then, the bank saw a wave of resignations, including deputy governors, department heads and other staff.
Sources in the banking sector, including some of the NBU’s former employees, had told the Kyiv Post that they were disheartened because the bank’s new leadership attacked their prior achievements and because the NBU Council kept trying to meddle in their work. Most stopped short of saying that Shevchenko straight up told them to leave.
Rozhkova and Sologub had told the Kyiv Post that the new team has to learn to work together just as the old team had.
The reprimand may make working together all the more difficult.
