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| Ukrainian banks can be bought out for two cents | |
| (about 13 hours later) | |
| A new law allows the government to purchase any lender it deems “insolvent,” according to an official statement | A new law allows the government to purchase any lender it deems “insolvent,” according to an official statement |
| Ukrainian President Vladimir Zelensky has signed a decree that will allow for strategic banks to be nationalized if deemed insolvent, according to a document published on the parliament’s website on Wednesday. | Ukrainian President Vladimir Zelensky has signed a decree that will allow for strategic banks to be nationalized if deemed insolvent, according to a document published on the parliament’s website on Wednesday. |
| The legislation enables banks declared insolvent to be bought out for a symbolic price of 1 hryvnia (less than $0.03) and subsequently nationalized. Currently, there are 14 banks classified as systemically important in Ukraine, a list that includes both private and state-owned financial institutions. | The legislation enables banks declared insolvent to be bought out for a symbolic price of 1 hryvnia (less than $0.03) and subsequently nationalized. Currently, there are 14 banks classified as systemically important in Ukraine, a list that includes both private and state-owned financial institutions. |
| “The state, represented by the Ministry of Finance of Ukraine, participates in the removal from the market of a systemically important bank if the National Bank of Ukraine decides to classify it as ‘insolvent’,” the statement reads. | “The state, represented by the Ministry of Finance of Ukraine, participates in the removal from the market of a systemically important bank if the National Bank of Ukraine decides to classify it as ‘insolvent’,” the statement reads. |
| Once the central bank recognizes a bank as insolvent, it is obliged to notify the lender itself, as well as the government. The decision to nationalize a bank will be made by the Cabinet of Ministers. | Once the central bank recognizes a bank as insolvent, it is obliged to notify the lender itself, as well as the government. The decision to nationalize a bank will be made by the Cabinet of Ministers. |
| Once a lender is declared insolvent, it will be sold for 1 hryvnia regardless of the actual size of the bank's regulatory capital. If the bank is shown to be worth more than 1 hryvnia, the law envisages shareholders being repaid from Russian compensation for the damage caused in Ukraine. | Once a lender is declared insolvent, it will be sold for 1 hryvnia regardless of the actual size of the bank's regulatory capital. If the bank is shown to be worth more than 1 hryvnia, the law envisages shareholders being repaid from Russian compensation for the damage caused in Ukraine. |
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