By the end of May this year, the Ministry of Finance of Ukraine will appoint an internationally recognized financial consultant to prepare for sale two systemic state banks – Sense Bank (formerly Alfa-Bank) and Ukrgasbank, which account for 4% and 6% of banking system assets, respectively, says the memo of the Ukrainian authorities on the updated EFF program of the International Monetary Fund for Ukraine.
“The Ministry of Finance (MOF) will appoint an internationally recognized financial advisor by end-May 2024 to prepare two systemic state-owned banks (SOB) for sale, i.e., Sense Bank and Ukrgasbank (4% and 6% of system assets respectively). The authorities have also committed that all systemic banks with majority state ownership will fall under the responsibility of the Ministry of Finance and any non-systemic banks that come under state ownership will not be recapitalized using fiscal resources and will be transferred to the Deposit Guarantee Fund for resolution upon breach of prudential requirements,” the document reads.
According to it, the main selection criteria will be international experience in the field of sale of financial institutions, the consultant’s proposal of a comprehensive plan of action for the sale, while the amount of the consultant’s remuneration should not be a key determining criterion.
“In preparation for SOB privatization, the MOF, in consultation with the NBU and IFIs, is reviewing and updating the 2012 draft law on SOB privatization and will submit it to parliament by end-March 2024,” reads the renewed memo.
In connection with the publication of these materials by the IMF, ABH Holdings SA (ABHH), which owned Sense Bank before its nationalization and which at the end of last year submitted a request to the International Center for the Settlement of Investment Disputes (ICSID) for arbitration and a statement of claim against Ukraine for amount in excess of $1 billion, demanding full compensation.
In connection with the publication of these materials by the IMF, ABH Holdings SA (ABHH), which owned Sense Bank before its nationalization and which at the end of last year submitted a request to the International Center for Settlement of Investment Disputes (ICSID) for arbitration and a statement of claim against Ukraine for amount in excess of $1 billion, demanding full compensation, expressed its protest.
“At the time when there is an ongoing ICSID arbitration concerning the expropriation, we consider the action by the IMF as interfering with the substance of the case, on the side of the respondent state, and a threat to the integrity of the arbitration,” the company said.
“Any potential buyer of Sense Bank should be aware that, if they decide to purchase it, their legal risks assessment will almost certainly be incorrect,” it said.