It might be possible to sell parts of PrivatBank in pieces, but it is unlikely that we will see a sale of the whole bank, explains the Director of the Swedish bank SEB. He also cannot see what kind of international bank would be interested.
Kyrylo Shevchenko, the governor of the National Bank of Ukraine, recently said that the state-owned bank PrivatBank would be put up for sale soon and that it “will draw the interest of the most prestigious international investors, including from the US and the EU.” PrivatBank is Ukraine’s largest bank with around 20 percent of the market, and the sale is supposed to bring down the government’s share of the bank market.
Director of the Swedish bank SEB, Kristian Andersson, finds a quick sale very unlikely.
“I was a bit surprised by the statement,” says Andersson to Ukrainenu, “I cannot see a lot of international interest and fight over this. To sell PrivatBank soon with all its court issues will be an impossible task, and I think there will be no interest from international buyers.”
PrivatBank is the largest and most profitable bank in Ukraine. In 2020, it had a net profit of UAH 25.3 billion, around 900 million dollars, according to Interfax Ukraine. The bank was nationalised back in 2016 because its owners, including oligarch Ihor Kolomoysky, were accused of having stolen around five billion dollars of its assets. There are still many court cases, and it is the main reason that no one will be interested, says Andersson.
“You could give a new buyer some substantial guarantees from the government, but even so, a new owner will spend most of his time in court for years ahead,” says Andersson, “I cannot see that any bank would be interested in this, especially not foreign ones.”
It can be sold in small pieces
The government plans to reduce its share of the banking market from 55 percent to 25 percent in five years. To do that, they will need to sell state-owned banks. Andersson says that it is likely that the government will be more successful in selling smaller parts of PrivatBank and other state-owned banks instead of it all at once.
“I think that selling pieces of the state-owned banks will be the way forward to make it more attractive for buyers,” says Andersson, “If they sell parts of PrivatBank, there will not be any legal troubles for buyers, but I don’t know if and how they will do that.”
“But to sell the whole thing will be impossible,” says Andersson, “We also have to remember that even though PrivatBank is the largest bank in Ukraine, it is still a tiny bank internationally because the Ukrainian banking market is so small.”
Andersson says that it is more likely that minority investors will buy parts of some of the other state-owned banks such as Oschadbank. They would get people on the board and management and bring knowledge to the bank and prepare it for sale over several years.
Currency exchange might be stable
Kyrylo Shevchenko, the governor of the National Bank of Ukraine, also said recently that he believed that the inflation rate would remain around seven percent this year, despite it jumping to 8.5 percent lately. Shevchenko also expects the hryvnia exchange rate to be stable around the current level of 28 UAH to one American dollar.
Andersson believes that the National Bank of Ukraine can keep both the inflation rate and exchange rate close to what is expected, despite uncertainty on the market. Recently, there have been worrying reports about a Russian military build-up near the Ukrainian border, which makes some fear the possibility of war.
“Things could differ a little bit, but not much,” says Andersson, “If war happens, it will be hard to predict what will happen, but I would not expect big movements in currency or inflation if there will be no invasion. This is for several reasons, but the main one is that the Ukrainian banking sector is much stronger now than back in 2014.”
Last week, the demand for Ukrainian bonds decreased, but Andersson says that it is too soon to conclude that it is because of the uncertainty of war. The market also waited for the National Bank of Ukraine to increase its interest rates, and it also created some instability.
“It will be more clear in a couple of weeks if it is due to fear of war,” says Andersson.