The new government plans to sell the state-owned banks. There are four of them in Ukraine - PrivatBank, Oschadbank, Ukrgasbank and Ukreximbank. This intention is part of a large privatization, which Yatsenyuk and Groysman spoke about at one time. The latter, however, were not going to sell state-owned banks - they had other lots. This time, two more state-owned enterprises, Ukrzaliznytsia and Ukrposhta, should be sold along with banks. Experts interviewed by 112.ua say the venture is hopeless. Lots are uninteresting, enterprises are illiquid. The only exception to this list is PrivatBank. Therefore, there is likelihood that the “Privatization operation” was conceived for the sole purpose of returning the bank to its former owner, that is, Igor Kolomoisky. Another question is whether he would like to acquire his former property in this way.
New privatization plan
Oleksiy Goncharuk, deputy head of the presidential office, said in an interview with Bloomberg that the future government should unblock large privatization. In its framework, in particular, they plan to sell shares of the aforementioned Ukrzaliznytsia and Ukrposhta. But this would be later, because in the first place banks should be sold. “I would like ten large system banks to enter Ukraine. To do this, we need to demonstrate economic growth, the independence of the banking regulator - the National Bank - and to establish the work of the judicial system,” he said.
It should be noted that a year and a half ago the government adopted the State Banks Strategy, which also dealt with privatization. The fundamental difference was that Groysman wanted to sell only a certain part of the state share in the capital of banks, while the Zelensky team, apparently, plans to sell the entire share. At one time, the inconsistency of the state bodies’ positions hindered the implementation of the Strategy: the Ministry of Finance supported the sale of the state share, but the National Bank opposed it. How this contradiction will be removed now is not clear. But if Ze-team puts their candidate to the NBU head post, instead of Yakiv Smoliy (in fact, Poroshenko’s man), the problem will disappear. But’s much more intriguing what will happen to PrivatBank now.
The entire judicial preparatory phase for the return of the bank to the former owner was successfully completed. On April 18, the Kyiv District Administrative Court upheld Igor Kolomoisky’s lawsuit and declared the privatization of Privatbank illegal. There were other court decisions - also in favor of the oligarch. True, the process has now begun to reverse - the higher courts are pausing the denationalization of Privatbank, and it is difficult to predict what the outcome of this story will be. The National Bank at one time promised to fight against such a decision to the end. But the NBU, as already mentioned, continues to be led by the protege of the old team.
Although among the new members of Privatbank Supervisory Board there are people who are negatively inclined to return the financial institution to Kolomoisky. We are talking about the economist Roman Sulzhik, appointed by the presidential quota. So far, he considers the nationalization of Privatbank to be a significant positive. This, of course, does not mean that in the future Sulzhik will not change his point of view.
In theory, everything is fine, but ...
But let’s abstract from Privat. Why would it be profitable and useful to realize the state fate of banks in the market? The answer is obvious: if there are foreign investors who want to invest in Ukrainian banks, they will thereby increase their reliability and profitability. And in general, they will work for the prestige of domestic financial institutions.
About this says the head of the Committee of Economists of Ukraine Andriy Novak. He considers only two scenarios: in the first, state-owned banks go to the buyer from abroad. In the second, they are overbought by domestic financial groups. In the first case, a breakthrough awaits the banking system of Ukraine, and in the opposite - a decline, "the withdrawal of capital and bankfall."
"There is nothing wrong with the idea of giving financial institutions to private hands. This means that the state will receive significant funds from such a transaction. Also, new private owners will appear in the bank, and they, as a rule, work more efficiently than the state ones. But the banking sector is very special, because that it deals with the money of people and enterprises, and this issue needs to be approached differently from the privatization of industrial facilities, residential or infrastructure objects, "Novak warns.
"Therefore, privatization is possible, there is nothing wrong with it, but the key here is how it will be carried out and who will become the new owner. If these are large world-class structures (European or American, banks with a high reputation), then this will only benefit the Ukrainian economy. Because there will be a new, higher level of banking services, higher competition, and most importantly, the country will gradually enter to the world capital market on decent rights, and so the state will be able to increase its credit ratings. And with the new owners, if it will be the world's banking industry, you can count on significantly higher levels of investment, crediting of Ukrainian economy. "
Andriy Novak adds that in the West the structure of banks is different, but private institutions still prevail. But Ukraine has its own specifics. The desire to do business in it is extinguished primarily by war, which makes all spheres of life extremely unstable, as well as gives the non-transparent rules of the game.
In addition, there is another factor - the unattractiveness of the lots themselves. After all, state-owned banks of Ukraine are in debt. Plus, a considerable number of problem loans hang on them - the president of the Ukrainian Analytical Center Olexander Okhrimenko points to this circumstance. “When you buy a bank, you immediately get a huge amount of problem loans. Now they are covered by the state budget, and buyers will have to cover it from their pocket. Why? It's easier to create a bank from scratch than to buy a cemetery that costs nothing,” the expert is convinced.
He recalls that since about 2010, there has been constant talk of selling Ukrgasbank, which has a more or less normal loan portfolio. But, according to him, when potential buyers saw the balance, they decided that they were being deceived. So far, state-owned banks have been afloat only at the expense of the state budget. And even if someone decides to buy this or that bank, he will have to invest billions of money just for it to work at least somehow, Okhrimenko sums up.
No one can handle paying at least 150 billion UAH for PrivatBank. In addition, businessmen have the example of Kolomoisky, who lost his bank when the state decided to nationalize it. Knowing this story, will someone want to risk their assets in order to acquire a troubled bank with debt obligations and one that can be taken away?
Financial analyst Olexiy Kushch believes that PrivatBank can be sold only in shares. Privat, he says, should be divided into three parts: the legal shell, the part that would issue loans, and the Privat 24 payment service. It was the latter that would be easy to sell. For ordinary depositors, nothing will change from this, but, however, there is a nuance: in a private institution authority guarantees the return of deposits up to UAH 200 000, and in a state bank they undertake to return the full amount. Therefore, for the average investor, the "statehood" of the bank is more profitable.
In the case of PrivatBank, the process of denationalization may be stalled by the International Monetary Fund. Experts recall that the bank was taken from the owner with the blessing of the IMF. And that the then managing director of the Fund, Christine Lagarde, supported the ex-head of the NBU Valery Gontareva in her plans for the nationalization of Privatbank. True, Lagarde has already left her post, and, as the media joke, "Kristalina will come instead of Christine." Potential new IMF leader, representative of Bulgaria Kristalina Georgieva, has not yet expressed her attitude to the problem of "Privatbank". And in any case, the rotation in the senior management of the Fund should affect the relations of this organization with Ukrainian financial institutions.
Is there an exit?
And yet, who could buy shares in Ukrainian state-owned banks? Economic expert Andriy Blinov believes that 10-20% of their stake could be of interest to international institutions - for example, the European Bank for Reconstruction and Development. Blinov recalls that part of the capital of Megabank and Aval is already in the EBRD. And this is right, because, he emphasizes, "the state in Ukraine should not have more than half of the portfolios of commercial banks in its hands."
“Naturally, the issue of sale will depend on the investment climate and whether it will be possible to find a respectable, serious Western investor for one or another part of the banks. Therefore, it seems to me that it is first of all necessary to solve the issue of entering the capitals of international financial organizations - the EBRD, the World Bank or the Credit Agency for Reconstruction. And it seems to me that the state will move in this direction," the expert says.
And he emphasizes once again: "the state owns a controlling stake in the banking system market. But its representatives have repeatedly said that their share should be at the level of 20-25 percent - for the private sector and foreign financial groups to develop." Blinov said that the current idea of privatization is "a repetition of the achievements of the previous government, but this continuity is logical, which is not surprising, because earlier the Minister of Finance was Olexander Danyliuk, who is now and a member of the new president team."
But who created the idea of selling state-owned banks is not so important right now. It is important how to implement it, and - most importantly! - how to manage the money from the sale of shares. In a conversation Pavlo Melnyk doubts that even with the successful privatization of banks, Ukrainian economy will get an impetus for development. “Money will come, which will immediately be spent on social programs, and that’s all. We don’t know how to reinvest properly,” says Pavlo Melnyk.
So, a separate problem is how to effectively dispose of funds from the sale of state-owned banks. But banks have not yet been sold, money for them has not been received, and ideas regarding investing capital have not yet been developed. Therefore, it’s too early to talk about this.