The Verkhovna Rada confirmed Yakiv Smoliy as National Bank of Ukraine governor for a seven-year term today in a 247-15 vote, 11 months after a deadline for President Petro Poroshenko to find a permanent replacement for the position.
Smoliy, a Ternopil Oblast native who started to work as the National Bank’s deputy governor in April 2014, has been in an acting role since May 2017.
He ascended to the position after his predecessor Valeria Gontareva resigned, citing “unbelievable pressure” while saying that the “reform was completed” of remaking the country’s banking sector.
The Rada approved Gontareva’s resignation as well in a 342-1 vote, with only Deputy Andriy Derkach voting against.
Observers have argued that Smoliy’s appointment will neither mean the leap forward in financial transparency that some desire nor the sliding backwards to open theft and embezzlement that others fear.
Little competition
Gontareva’s tenure saw the closure of 71 banks, as well as the nationalization of PrivatBank as the lender teetered on the edge of collapse from a $5.6 billion hole in its balance sheet.
Many of the reforms were pushed for – and later lauded by – the International Monetary Fund, which purportedly began to lose confidence in Gontareva following leaked phone calls in October 2016 that appeared to show that the central bank had falsified the amount of capital in certain Ukrainian lenders.
Smoliy’s name first began to be floated by National Bank insiders in April, as Gontareva entered
a month long lame duck period after publicly tendering her resignation. As deputy governor, Smoliy immediately became acting chief of the institution once Gontareva left the position in May.
The 56-year old banker’s name came up most often with those of two others: Oleksandr Hrytsenko, the chairman of the board of Ukreximbank, and Volodymyr Lavrenchuk, the longtime head of Raiffeisen-Aval.
Former Prime Minister Arseniy Yatsenyuk’s name was briefly raised in the Ukrainian media as well, before he shot down speculation that he would take the job in a February interview on ICTV.
But it was Lavrenchuk, who told the Kyiv Post in April that he was open to the job, that generated the most speculation.
A favorite of international financial institutions like the IMF, EBRD, and World Bank, Lavrenchuk’s name was bandied about for months as the National Bank had no set chief, angering those same organizations.
As Bluebay analyst Timothy Ash wrote in an August research note, “Cynics might argue that Poroshenko had no intention of appointing an independent minded person such as Lavrenchuk as governor, and he is just biding his time, to see what options/opportunities arise to use the NBU posting for leverage with others.”
Long career, little change expected
Smoliy spent his entire career in Ukraine’s private sector before 2014, when he joined the National Bank as deputy governor.
He worked at Aval Bank until 2005, when it was bought out by the Austrian Raiffeisen Bank.
From 2006, Smoliy ran the banking business for Prestige Group, a Kyiv-based firm that develops residential and office buildings as well as trading other goods. Some Ukrainian news websites have linked Prestige-Group with Vladyslav Lyaskovsky, the former director of President Petro Poroshenko’s Channel Five.
In what appears to be a bizarre coincidence, Lyaskovsky appears to own another “Prestige Group,” in this case an LLP registered to a different address from the Prestige Group at which Smoliy worked.
Smoliy’s public asset declaration reveals him to be similar to his predecessor in one crucial way: extreme wealth and a love for expensive cars. Smoliy declared $4.5 million in various bank accounts, not including additional wealth in the form of securities. He also owns a Mercedes SUV, a jetski, and a golf cart.
Oleksandr Savchenko, a former NBU Deputy Governor and current rector of Kyiv’s International Institute of Business, called Smoliy a “stable choice.”
“He’s from an older school of bankers,” Savchenko said.
Aleksandr Paraschiy, a research analyst at Concorde Capital, called Smoliy a “straightforward candidate.”
“We see this development as optimal for the regulator,” Paraschiy wrote. “Smoliy will continue the reform path of the central bank.”
He added: “Such a delay is not something unusual for Poroshenko. Acting heads now run two ministries and at least 12 other top executive/regulatory bodies, including the NBU, State Property Fund and State Fiscal Service.”
