Ukraine’s Deposit Guarantee Fund, a state body responsible for protecting bank depositors’ rights, on April 10 sold a 28,190-square-meter office belonging to VTB Ukraine, the collapsed Ukrainian subsidiary of Russia’s state-owned VTB Group of banks.
The office, located on Václav Havel boulevard on the outskirts of Kyiv, was sold for Hr 351 million ($13 million).
According to Prozzoro.Prodazhi, the online auction platform through which the assets were sold, the buyer is a furniture company owned by businessman Vadym Hryhoryev.
In May 2018, Hryhoryev bought the Renaissance Business Center and 7,500 square meters in the Toronto-Kyiv business center, both situated near Kyiv’s city center. The seller was Alfa Bank, Russia’s largest private bank, owned by Russian billionaire and Lviv native Mikhail Fridman.
Lyudmila Shapran, the Deposit Guarantee Fund’s head of communications, told the Kyiv Post that the total assets of VTB Ukraine are valued at Hr 6.8 billion ($250 million), while the protected deposits at the bank that are due to be repaid by the fund amount to Hr 933.6 million. Of this sum, Hr 780 million, or 83 percent, had already been repaid to depositors as of April 1, according to Shapran.
The fund guarantees up to Hr 200,000 ($7,400) worth of bank deposits of individuals or entrepreneurs.
VTB Ukraine was liquidated back in December 2018 shortly after it was declared insolvent due to liquidity problems. Since then the bank has been managed by a temporary administration at the Deposit Guarantee Fund, a normal procedure for banks that are being liquidated in Ukraine.
The liquidation of the bank was part of a larger drive to clean up the banking system in Ukraine, with the central bank liquidating more than 90 banks that were considered to be poorly managed.
VTB Ukraine is a subsidiary of VTB bank, a Russian financial conglomerate with an international presence, 60 percent of which belongs to the Russian government.
After Russia launched its war against Ukraine in early 2014, Russian financial institutions, which comprised nearly 20 percent of Ukraine’s banking sector before the war, have faced difficulties.
The outflow of deposits and attacks by protesters on Russian banks demanding the departure of Russian companies from Ukraine were followed the imposition of sanctions by Ukraine’s government in early 2017.
The sanctions were imposed against banks with Russian capital, meaning the subsidiaries of Russian banks were banned from transferring money to their parent companies, in turn forcing Russian banks to declare their intention to leave Ukraine.
In late 2018, a Ukrainian court ruled in favor of a lawsuit by Ukrainian oligarch Ihor Kolomoisky, the former owner of PrivatBank, once Ukraine’s largest private bank, who demanded the freezing of assets belonging to Russian state-owned banks – VTB bank, Sberbank and Prominvestbank controlled by Russian Vnesheconombank (VEB).
The lawsuit was a response to the Permanent Court of Arbitration in Hague, the Netherlands, ruling that Russia had violated the 1998 investment protection agreement between Russia and Ukraine. PrivatBank is estimated to have lost the equivalent of $139 million in assets when Russia invaded and started to occupy the Ukrainian peninsula of Crimea in 2014.
