September 19, 2019 / 11:46 AM / a month ago

EBRD says remains vigilant over Ukraine's PrivatBank

KIEV, Sept 19 (Reuters) - Ukraine’s President Volodymyr Zelenskiy has given reassurances that PrivatBank’s nationalisation will not be reversed but the situation needs to be monitored closely, the vice president of the European Bank for Reconstruction and Development said.

The EBRD’s Alain Pilloux, who met Zelenskiy on Tuesday, told reporters on Thursday that the president understood the damage that the PrivatBank issue could do to his reform agenda and Ukraine’s image.

“We expect the Ukrainian authorities to do the right thing, which is to go after the money which seems to have been stolen from that bank, and of course we expect that this bank is not going to be returned to its former shareholders,” Pilloux said.

“What I am telling you now, this is exactly what I heard from President Zelenskiy when I met him. I have no reason to doubt his determination to do so. At the same time, we are vigilant and we judge on deeds.”

Ukraine’s largest lender, PrivatBank was taken into state hands in December 2016.

Main owner Ihor Kolomoisky has fought a protracted legal battle against the government to regain control or win compensation.

Zelenskiy has longstanding business ties to Kolomoisky and his handling of PrivatBank is being closely watched by investors.

The International Monetary Fund (IMF) could freeze aid if the nationalisation were reversed.

The EBRD and the IMF backed the nationalisation of PrivatBank as part of a clean-up of the financial system. Authorities said the lender had a $5.6 billion hole in its balance sheet, an assessment which Kolomoisky disputes.

The EBRD, a London-based international lender, was founded in 1991 in order to support the transition of former Soviet block countries into market economies.

This year it has invested $1 billion in Ukraine, said Pilloux, adding that reforms had accelerated under Zelenskiy.

A political novice, Zelenskiy won a landslide election in April promising a crackdown on corruption.

PrivatBank’s headquarters were raided by police last week and a property belonging to former central bank governor Valeria Gontareva, who oversaw PrivatBank’s nationalisation, was burned down.

Pilloux said Zelenskiy understood these events were a challenge to his image and that of Ukraine and that “if it were to continue, (they) would have the potential to derail part of the president’s reform agenda by undermining investors’ confidence in Ukraine.” (Editing by Jason Neely)

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