PrivatBank not to be returned to ex-owners, Court of Appeal rules

That’s according to the National Bank of Ukraine, Ukrinform reports.

On November 15, 2023, the court annulled the judgment handed down by Kyiv’s the District Administrative Court of April 18, 2019, which granted the lawsuit filed by PrivatBank’s former co-owner, Ihor Kolomoisky, against the National Bank, the Cabinet of Ministers, the Individual Deposit Guarantee Fund, and the National Commission for Securities and the Stock Market. That judgment recognized as illegal and annulled the decision of state authorities to withdraw the insolvent PrivatBank from the market with the participation of the state.

"The National Bank welcomes the decision of the Court of Appeal The decision to withdraw the insolvent PrivatBank with the participation of the state was made in line with legislation, supported by the NSDC and government in order to ensure financial stability and preservation of citizens' funds. Today, six years on, the court confirmed the impossibility of PrivatBank, whose recapitalization cost the state over UAH 155 billion, being returned to its former owners. It should also be stated that all the decisions made the state bodies regarding PrivatBank’s nationalization are valid," said Viktor Hryhorchuk, Head of Claims and Litigation Office at the NBU Legal Department.

According to the official, the court applied the Law of Ukraine on amendments to certain legislative acts of Ukraine on improving banking regulation mechanisms (No. 590-IX), as the claims put forward in the suit  were in breach of the law’s provisions.

As reported, on December 18, 2016, the National Bank of Ukraine declared PrivatBank insolvent and decided to further withdraw it from the market with the participation of the state. The central bank also turned to the government with a proposal to acquire ownership of the bank's shares.

The decision was based on the fact that the bank’s regulatory capital was reduced to a negative value. The shortfall in PrivatBank's capital was confirmed, in particular, by an independent, internationally recognized auditor. The bank's shareholders failed to fulfill their obligations regarding its financial recovery. On the same day, the Cabinet of Ministers passed a decision on the state joining PrivatBank’s capital.

On April 18, 2019, Kyiv’s District Administrative Court, based on the lawsuit filed by Ihor Kolomoisky, recognized as illegal and abolished the government's decision to withdraw the insolvent PrivatBank from the market with the participation of the state. Passing this decision, the court ignored the need for Privatbank’s recapitalization, established by the NBU, and the fact that PrivatBank and its shareholders never implemented the financial recovery program. On May 24, 2019, the NBU filed an appeal.

On March 2, 2021, the Sixth Administrative Court of Appeals suspended proceedings in the case until the Constitutional Court of Ukraine considers the case based on the lawsuit filed by 64 members of parliament regarding the constitutionality of certain provisions of the law on amendments to certain legislative acts of Ukraine on improving banking regulation mechanisms (No. 590-IX).

On June 1, 2022, the Supreme Court canceled the decision to suspend the proceedings in the case, which allowed the trial to continue in the court of appeal.