Ukraine Nationalizes Its Largest Bank, Which Holds 36% Of All Domestic Deposits

Cross-posted from Zero Hedge

It was just a few short days ago, on Wednesday of last week, that Ukraine’s largest lender, PrivatBank, said that reports it will be nationalized were “attempts to create panic and destabilize the political situation in the country.

Local media, quoted by Reuters, speculated that Privatbank, which is part-owned by one of Ukraine’s richest men, billionaire Ihor Kolomoisky, could be privatized if it does not meet a year-end deadline for Ukraine banks to reach a capital ratio requirement agreed under an International Monetary Fund bailout program. However, what made Privatbank unique, is that with some $6 billion in private deposits – or 36.5% of Ukrainian banks’ total – it puts America’s own TBTF banks to shame: the bank is an absolute giant which controls nearly half of the local banking sector.

On Wednesady, the bank’s deputy chairman reaffirmed that there was nothing to worry about and said its customers had received phone calls and messages telling them the bank would be taken under state control due to a failure to meet the required capitalization level. “Exploiting the ignorance of citizens about nationalization, they stir up panic,” Oleg Gorokhovsky said, without saying who was behind the reports.

Separately, the bank stated that “the information attack on Ukraine’s largest bank, Privatbank linked to the ‘pseudo-nationalisation’ of the bank is primarily directed at clients of the bank and is an attempt to destabilize the political situation in the country.” It added that the reports of its imminent nationalization were politically motivated.

Fast forward four days, when late on Sunday night, the “attempts to create panic and destabilize the political situation” in Ukraine turned out to be true after all, and whether politically motivated or otherwise, the Ukrainian government announced hours ago that it would nationalize the suddenly very ironically named PrivatBank, unleashing one of the biggest shake-ups of the banking system since the country plunged into political and economic turmoil two years ago

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