Privatbank, expropriated from Ihor Kolomoisky a few years ago, was no longer needed by the state. The financial institution is being prepared for sale, and as to why this had happened, the opinions of experts diverged. However, even before the sale, the bank's reputation slipped downward. Perhaps this is a combination of circumstances, perhaps a purposeful work to make the sale item look less attractive. has been figuring out both the stories of the offended clients and the financial aspect of the Privatbank denationalization.
Time for astonishing stories
On May 8, 2021, Liliya Ragutskaya, the journalist of the outlet Obozrevatel, published the following post on her Facebook:
"Privatbank, please explain how it could have happened that from my retired mother’s card every day—almost every day, starting at least from April!— from 150 to 1000 UAH were charged off for some mythical "entertainments" from the unknown "companies"? How could it happen that such amounts easily disappeared from the account without any request for confirmation of the operations? I emphasize: the person is retired, did not order any "entertainment" and did not give permission to withdraw funds, no one except her had access to the card. I found out that she had been simply robbed when I could not pay for the medicine at the pharmacy."
Obviously, there was a fraud, but it is not clear why the bank, which is usually responsive to even refilling the phone account and requires confirmation of the operation, this time "did not notice" the significant funds charging off.
"The bank told us that it was impossible to appeal the transactions," Ragutskaya says.
After the dialogue with the bank failed, the journalist went to the police. This was in Obukhiv, and the crime report was accepted, but the police made it clear that the case was hopeless. Indeed, we learned from our sources that fraud with the funds charging off has never reached the court. Although such cases are not isolated, and from the circle of these lines author alone there are four victims, of whom only Liliya Ragutskaya agreed to make her name public.
However, there are enough such stories on the open spaces of Facebook. Here's a post from a user named Tetiana Khoda:
"On May 30 (Sunday) at 4:23 am from my personal payment (salary) card all the funds that were on the card were transferred for Internet entertainment without my knowledge, and this was almost 35,000 UAH. For some this amount is little, for some it is a lot... But the main thing is that these are my earnings(...). There was no SMS notification about the withdrawal! The transfer limit was 500 UAH! The card was at home, passwords in my head... I did not give anything to anyone! I am an adequate, intelligent person!"
According to Khoda, she blocked the card through an operator, to whom she did not immediately get through. Then there was the police, who immediately after writing the report said that they were unlikely to deal with the case, because today this is the fifth such report.
"The result is as follows: no money was returned to me and today dear Privatbank sent a letter stating that the bank could not return the money. Can not! My own funds."
In order to professionally explain who is to blame and what to do in such a situation, the synergy of law enforcement agencies and the bank's security service is needed. But the law enforcement bodies explain off-records that no one is and will not deal with such cases. Such a crime looks too "minor". The bank also washes its hands, shifting the responsibility to the client and claiming that the leakage of information about the card and account occurred precisely through the user's fault.
Certainly, fraudsters attack not only Privatbank clients, and fraud methods are becoming more and more inventive from day to day. But one of the Dnipro websites (where the headquarters of Privatbank is located) writes that the bank itself leaks the data of its clients into the network. This is just an assumption, the article notes, but an assumption that has the right to exist.
And here is a story of a different kind, and also from a journalist. Lesya Shovkun, co-editor of the outlet Novynarnia, noted the following on Facebook on July 4:
"You know what I'll tell you, Privatbank. Unexpectedly, to lower the credit limit six times for a client who has been using your card and credit funds on it for many years, and during all this time there was not a kopiyka of interest debt—this is not just piggishness, but outright disrespect for this very client. However, thank you for prompting us not to be lazy and finally open a card in another bank, as everyone has been advising us for a long time."
spoke to Shovkun as well and found out that the bank had agreed to restore the status quo on condition of providing a bunch of additional information. Moreover, the list of such information looks strange and seems to go beyond what the bank has the right to be interested in.
"They wanted confirmation of my solvency: a work reference, a passport, proof (!) of trips abroad, documents on ownership of an apartment, house, land, car, and in general everything that someone might have, statements of accounts in other banks, etc., the list is endless, in my opinion. For so many years I have never had a debt (in the sense, I never allowed it to come to any kind of penalty, because I always repaid all the credits I had got on time), and now they demand a reference from me about where I was and what I am doing," she is indignant.
It is interesting that in the comments under Shovkun’s post there are the words of the famous lawyer Valeriia Zakrevska (protects the interests of the families of the Heavenly Hundred), who notes that the opposite irritates her in the work of Privatbank: opening a credit the client did not ask for. By the way, it is difficult to get rid of such a service: it has the ability to revive like a phoenix, even after you refuse a credit from Privat-24.
Different gauges of reputation
"If the number of dissatisfied people reaches 10%, then this is a real negative," he says.
In other words, even such "insignificant" (from the point of view of the police) stories as the story of Liliya Ragutskaya can affect the cost of a financial institution and thin out the crowd of people who want to buy it. And it does not matter who is behind the quarrels between the institution and its clients—the ridiculous management of the bank or the forces interested in reducing its price.
By the way, the price of Privatbank ranges from $3 to 5 billion—none of the domestic buyers will pay such an amount, experts say. The state, if it really wants to get rid of the purchase made in 2016, should focus on foreign investors. But they, too, are likely to acquire such a colossus as Privat, only in parts.
Potential buyers, of course, will reckon with the reviews of the bank's clients and their possible outflow, but in the case of Privat, this is by no means the main thing.
"Even if we had a buyer for Privatbank, until the issue with the former owners is closed, namely the lawsuits, no one will go there," Sergey Fursa, investment banker of Dragon Capital, believes.
So many scandals really drag on behind Privatbank, the very mention of them is worth a separate dissertation. In 2015, the outlet Dzerkalo Tyzhnia (Mirror of the Week) published an investigation that the lion's share of the credits given by the bank at one time went to finance the business of the Privat group in the Dnipropetrovsk region and in Cyprus. The bank, therefore, served the sole purpose of collecting resources to attract its owners to the business.
Another investigation carried out by the outlet Nashi Groshi (Our Money) says that in the summer of 2014, Privatbank, through the bogus firms, siphoned $1.8 billion abroad, and this led to a collapse of the hryvnia exchange rate.
And in August 2016, it was reported about an investigation by the General Prosecutor's Office, which noted that the funds allocated by the National Bank for refinancing Privatbank had been used by the former owners for other purposes, but, more simply, stolen. From 2016 to the present day, the Prosecutor's Office, NABU, and Specialized Anti-Corruption Prosecutor's Office are investigating several cases related to Privatbank. And lawsuits from the state, where the former owners act as defendants, are pouring in like a cornucopia.
Of the very recent reports, the following can be noted. Privatbank has filed a lawsuit against Ihor Kolomoisky, Hennadiy Boholyubov, and their confidant Vyacheslav Kartashov to Israel in the case concerning the siphoning of 17 billion UAH from the Israeli bank Discount.
Earlier, the Israeli Supreme Court had already rejected an appeal against Privatbank filed by Discount, with which it tried to stop consideration of Privatbank's claims pending court decisions in the UK and the United States. And in the United States, "the systematic work of all investigative bodies is underway concerning Kolomoisky, and he is doing badly," Andriy Yanitskyy, an economic journalist and co-author of the book Private History, assures.
Now there is a possibility that the Israeli court will side with Privatbank, or rather, the Ukrainian state. Just as in 2019, the London and Wales Court of Appeal took the side of Privat and ordered the aforementioned defendants to pay the bank 10.9 million pounds. Later, in February 2021, the same appellate court "added" Kolomoisky a million pounds sterling more so that Privatbank could cover all its legal costs.
And this decision is far from the last. The trials will go on and on, which is not the best "dowry" for Privatbank. And if this does not become an obstacle to the sale, then at least it will significantly reduce its price. All economic experts, without exception, agree on this.
There is no money in the budget, and therefore the state is looking for any possible sources of its filling. One of the options is to sell off interesting assets that include Privatbank. There are still several factories, several enterprises, but Privat is the most tasty morsel.
Expert of the agency MPP Consulting
He defines "huge assets and a powerful client base" as to the advantages of Privat, and this will be of interest to investors.
This version is supported by the fact that Privatbank is not the only financial institution that the state wants to sell. The course towards privatizing state-owned banks is embedded in the government's strategy for reforming the banking sector. Its updated version was approved by the Cabinet of Ministers back in September 2020. According to it, the government plans to reduce the state's share in the banking sector from 60% to 25%.
Privatbank is also included in the program, as the Governor of the National Bank of Ukraine Kyrylo Shevchenko told GlobalCapital. He added that "the privatization of Privatbank will be of interest to the most prestigious international investors, in particular from the US and the EU."
It may interest the bank, but it all depends on how to properly present such a sale.
"If investors know that the bank is being sold not because they want to give a new impetus to its development, but because the state needs money, they will bargain madly and offer less," Melnyk believes.
Therefore, the true motives should be disguised if they really consist in filling the state treasury.
In addition, Privatbank is a defendant in lawsuits. However, the above-mentioned head of the NBU Shevchenko predicts the completion of all courts regarding Privat by the end of this year. He does not explain, however, what gives him a reason for such optimism. Is that an amicable agreement that can be concluded by the state and the former owners.
Ukrainian courts (as opposed to international ones) are a separate section of this epic. In 2019, the District Administrative Court of Kyiv (DACK) ruled on the illegality of the Privatbank nationalization, but this, however, was a phantom decision that was never made public. The judges were guided by the fact that the bank's capital diagnostics should have been carried out not by the NBU (the National Bank recognized Privat as insolvent, but it allegedly acted as an interested entity), but by an independent auditor.
However, as already mentioned, the DACK decision was not made public and did not come into effect. The legality of the Privatbank nationalization today is beyond doubt—in contrast to the prospects for its sale. As for the DACK, President Volodymyr Zelenskyy initiated the liquidation of this court. The Head of State also submitted a relevant bill to the Parliament.
But, returning to Privatbank, let us note that the court cases regarding Privat can become a serious obstacle not for all buyers when purchasing a bank.
Taking into account the fact that the legal proceedings continue, there will be companies that want to buy the bank, and they are not afraid of Kolomoisky or Boholyubov. American, South Korean, or Japanese companies can shell out a goodish sum of money for it.
Economic journalist and co-author of the book Private History
He adds that Privatbank looks the most successful amid other state-owned banks: it generates a third of the income of the entire banking sector, it has independent corporate governance, it has streamlined processes, a large client base, and it can cost a lot of money.
"There are many assessments now. But I heard among economists the amount of 100 billion UAH, for example. Plus the prospect of returning funds from the former shareholders," Yanitskyy says.
For some it is attractive, for others it is not, Privatbank can be sold: in theory, it is so, but in practice, time will tell. But the management should now use this very time to strengthen a positive reputation, and not squander it. And although the average client is usually not very interested in the authorities, sometimes it is worth making an exception and listening to the claims expressed by him. Because it will be justified in the future—both literally and figuratively.