About Money and Christmas

Mostly unnoticed by western European media, the government of Ukraine did a historic move last month: the nationalization of the biggest bank of Ukraine, Privatbank.

The bank was owned primarily by Ihor Kolomoyskyi, oligarch and former governor of the Dnipro oblast (ukr. region), and had accumulated debts of appr. 5 million USD (148 million UAH) by 01.12.16. Faced with the possibility of a collapse of Privatbank, which is also used by many Ukrainian employees including the majority of state employees, President Poroshenko, Prime Minister Groisman and head of the national bank Gontorewa decided to take over the bank completely including mentioned debts.

The decision and subsequent actions have been done with consent of the bank owners in a smooth and for the most part adequate way. Although the media outcry was enormous, a bank run has not occurred and the bank itself remained fully functional and able to provide services except for a 1 day transition phase.

Both the IMF and the EBRD are supervising the process, which shall lead to a reconstruction and a subsequent reprivatisation of the bank in the long run.

 

In the past years Ukraine has cleaned its banking sector, closing down approximately 80 banks and enforcing tougher rules for the remaining ones. Many of those banks have been used to give unpayable loans to specific individuals, who are often close to the owners themselves. Once the banks could not repay their debts, the government would need to step in, effectively paying the debts with taxpayer money. It stands to reason that this corruption scheme was also widely used in Privatbank, as 97% of the business loans have been given to companies affiliated with the shareholders.

 

But those heavy topics have been mostly forgotten last week, when Ukraine together with many other countries in Eastern Europe celebrated Christmas on the 6th of January. The difference to western Christmas is a consequence of the usage of the Julian calendar by the orthodox christian church, including both the Moscow and Kyiv Patriarchate. So if you know someone from Ukraine, it’s never too late to congratulate!

 

by Filipp Trigub, 08.01.2017

 

Sources:

 

1:http://www.pravda.com.ua/rus/articles/2016/12/19/7130315/  (Accessed on 08.01.17 18:12)

2:https://www.kyivpost.com/business/state-takes-privatbank-taxpayer-losses-will-least-5-6-billion.html (Accessed on 08.01.17 18:12)

3:http://www.manager-magazin.de/unternehmen/banken/privatbank-ukraine-verstaatlicht-groesste-bank-des-landes-a-1126488.html (Accessed on 08.01.17 18:12)

4:http://www.euronews.com/2016/12/19/ukraine-s-largest-bank-privatbank-nationalised (Accessed on 08.01.17 18:12)

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