PrivatBank was a typical financial pyramid before nationalization
Before the nationalization, the bank had no resources to return deposits - National Bank of Ukraine
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Before nationalization, PrivatBank was a financial pyramid. This was reported by the press service of the National Bank of Ukraine. "Before the nationalization, the bank had no resources to return deposits, PrivatBank was a financial pyramid," said the deputy head of the National Bank of Ukraine (NBU), Kateryna Rozhkova.
Representatives of the National Bank of Ukraine (NBU) gave people's deputies information about the results of the audit conducted by the international company Erst & Young (EY). According to the regulator, the audit confirms that Privatbank was a financial pyramid before the nationalization.
"All the conclusions of the independent auditor have once again confirmed the estimates made by the NBU regarding the unsatisfactory financial situation of PrivatBank at the time of its nationalization and the reasonableness of the decision of the state to enter the bank's capital to protect more than 20 million of its customers and preserve financial stability in the country," noted the deputy head of the NBU Kateryna Rozhkova during the meeting of the profile committee of the Verkhovna Rada.
Among the key conclusions of the auditor, the deputy head of the NBU singled out the following:
- Provisions for impairment of loans and advances to customers amounted to 184.3 billion UAH, which fully confirms the "hole" in the balance sheet of the bank at the time of nationalization and the catastrophically low quality of assets. The negative balance sheet and regulatory capital of PrivatBank as of December 31, 2016 was minus 882 million UAH and minus 2.6 billion UAH respectively. This, in turn, confirms the need for additional capitalization of the bank.
- The concentration of the bank's corporate loan portfolio in the core business areas of former shareholders has been confirmed - there are no large enterprises among the borrowers of the bank that are not affiliated with the Privat group.
- A significant amount of depreciated loans - 206.5 billion UAH, of which only a small part are loans to individuals and small and medium businesses (14.9 billion UAH). According to the NBU, this indicates a risky credit policy, which was conducted by former management. For comparison: the amount of people's funds in the bank at the time of state entry into the capital was 151.2 billion UAH. That is, before the nationalization, the bank had no resources for the return of deposits. PrivatBank was a financial pyramid.
- Of 178.4 billion UAH loans to legal entities and 15.3 billion UAH of financial leasing only 23.7 billion UAH were secured. Because of the lack of collateral, borrowers are not interested in repaying loans, and debt collection in court is superheavy.
According to her, the tasks of EY did not include the study of the problems of insider loans of PrivatBank in preparation for the bank's report on 2016. Confirmation of the insider nature of loans granted to PrivatBank by former related persons is included in the list of tasks of forensic audit, which should be completed before the end of September this year.
"The auditors do not confirm the reliability of the data stated in the 2015 annual report of PrivatBank, which was accepted by the previous auditor, PwC, which in fact means that the depreciation of credits could have occurred both in 2016 and in previous years," Rozhkova stressed.
Recall, December 21 last year, PrivatBank passed into state ownership. December 19, after the announcement of the nationalization of PrivatBank, Ukrainians withdrew about 2 billion cash from PrivatBank ATMs. December 21, NBU reported that the amount of withdrawals from cash machines PrivatBank equaled the indicators before nationalization.