Court confirms nationalisation of PrivatBank was legal

An appeals court has overturned the decision of the infamous Kyiv district administrative court, or OASK, that deemed the nationalisation of PrivatBank, formerly owned by the oligarch Ihor Kolomoiskyi, illegal, the bank said in a statement on Wednesday.

On 18 April 2019, the OASK, which is by now dissolved due to rampant corruption, ruled in a lawsuit filed by Mr Kolomoisky that the Ukrainian government’s decision to bail out the insolvent PrivatBank was unlawful and cancelled it.

The court claimed the defendants had failed to prove that there were legal grounds for classifying PrivatBank as insolvent, which resulted in its nationalisation.

NBU, Ukraine’s central bank, explained that the OASK had ignored the established need to recapitalise PrivatBank and the fact that it had not implemented its financial rehabilitation programme, and immediately filed an appeal.

The sixth administrative court of appeal in Kyiv eventually closed the proceedings that lasted for more than six years, referring to a law that prohibits the return of banks declared insolvent and bailed out to their former owners.

“The decision to bail out the insolvent PrivatBank with the participation of the state was made in accordance with the current legislation, supported by the national security and defence council and the government to ensure financial stability and preserve citizens' funds,” it said in a statement.

PrivatBank also welcomed the court’s decision, calling it “a victory for the state and all government agencies”.

“The former owners of the bank wanted to return it to their ownership, but this is expressly prohibited by law, and the court of appeal confirmed this, putting an end to it for now,” Oleh Lazovskyi, head of legal coordination at PrivatBank, was quoted as saying.

While this is not the last lawsuit challenging the nationalisation, it is the only one where the OASK declared it illegal.

After the nationalisation of PrivatBank, the state spent UAH 155 billion on its financial recovery. Thanks to the bail-in operation, PrivatBank's authorised capital was increased by UAH 29.4 billion.