Banks, Financial Services, Latvia, Ukraine

International Internet Magazine. Baltic States news & analytics Friday, 29.03.2024, 06:12

Latvia’s PrivatBank works as usual – financial watchdog

BC, Riga, 19.12.2016.Print version
Latvia’s PrivatBank is working as usual and there is no special customer activity observed after the Ukrainian government made an announcement on nationalization of Ukrainian’s PrivatBank, the Latvian Finance and Capital Markets Commission (FCMC) said LETA.

The bank’s customers in Latvia are contacting the bank and showing interest in the current situation. FCMC representative Jelena Lebedeva said that the bank’s customers in Latvia have no reason to worry about the situation.


Asked whether the bank has sufficient funding to pay out money to its customers if they request that, Lebedeva said that clients have the right to request payment of their deposits and banks have the duty to pay this money. She said that PrivatBank’s indicators are very good, and the liquidity indicator after the third quarter of this year was over 100%.


The financial watchdog noted that Latvia’s PrivatBank is an autonomously operating bank in Latvia, namely, it is not a branch of Ukrainian bank, but an independently functioning bank that operates under the laws of the European Union. The majority shareholder in Latvia’s PrivatBank is Ukrainian PrivatBank with a 46.5% stake. Other minor shareholders have less than 10% of bank’s voting shares.

"In relation to the decision of the Ukrainian government to nationalize PrivatBank, the largest shareholder of PrivatBank has changed – the Ukrainian state has become the owner of Ukraine’s PrivatBank and now holds a 45.5% stake in Latvia’s PrivatBank. The Finance and Capital Market Commission keeps close contacts with the Ukrainian central bank and PrivatBank and is following the course of events closely," the watchdog’s representatives said. In assessing currently available information and statements by the Ukrainian central bank, at the moment the FCMC does not find a material impact on the bank’s operations at the moment, except the changes in the shareholders’ structure.


The commission also said that in accordance with binding principles for the assessment of shareholders laid down in the EU regulatory framework, FCMC together with the European Central Bank (ECB) will assess the new acquirer of indirect qualifying holding. Availability of free assets and their financial soundness are evaluated at the assessment process, including legal origin of the funds committed to investments and reputation of investor. Since the new shareholder is the Ukrainian state, a particular attention will be focused on the bank’s strategic plans.


Th commission said that Latvia’s PrivatBank meets all regulator’s requirements. The bank in Latvia has its own business plan and business strategy and is independent of Ukraine.

As reported, the Ukrainian government took over control of Ukraine’s PrivatBank last Sunday after the Ukrainian central bank requested a temporary supervision of the bank to keep it from going bust because of bad debts.


The Ukrainian government said in a statement that it was now the "100 percent owner of PrivatBank and guarantees the uninterrupted functioning of this institution and the safety of its clients' money."


The bank belonged to Igor Kolomoyskiy - a politically powerful billionaire who became an early target of Ukrainian President Petro Poroshenko's uphill fight against corruption, and Gennady Bogolyubov. According to local media reports, the bank had lent money to some of select insiders who never repaid the loans.


The Ukrainian government promised in a statement to ensure a smooth takeover of stable operations of the troubled bank. The Ukrainian central bank has also promised there will be no disruptions in PrivatBank’s operations, the FCMC said.


According to the third-quarter financial report released by Latvia’s PrivatBank, its assets stood at EUR 399.84 mln at the end of September, down 37% from the end of 2015.

At the end of the third quarter of this year, the bank posted a profit of EUR 8.4 million, while the banking group’s profit was EUR 8.57 mln.


Ukraine’s PrivatBank is the key shareholder of Latvia’s PrivatBank, holding a 46.54% stake in the Latvian bank. Private individuals own 27.09% of Latvia’s PrivatBank shares, and the remaining shares belong to several companies registered in Cyprus, Bermuda and Belize, according to the latest information released by the bank.


In late September, Latvia’s PrivatBank was the 12th largest bank in Latvia by assets, according to information from the Association of Latvian Commercial Banks.


At the end of September, Latvia’s PrivatBank was also the 12th biggest bank by deposits. At the end of the third quarter, the bank held EUR 302.48 mln in deposits, down 25.4% from the end of June and down 47.8% from the third quarter of last year, according to the banking association’s dat






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