LONDON, June 11 (Reuters) - Ukraine’s PrivatBank shed more than $300 million of deposits after a Kiev court ruled in April that the nationalisation of the country’s largest lender was illegal, the bank’s finance chief said on Tuesday.
PrivatBank was nationalised as part of a clean-up of the banking system backed by the International Monetary Fund (IMF) and wrested the lender from Ukrainian tycoon and co-founder Ihor Kolomoisky in December 2016.
Ukraine’s central bank has appealed against the Kiev court’s ruling, seeking to overturn a decision that has raised fears that the loss of a key plank in Ukrainian reforms could endanger the government’s relationship with investors and international donors such as the IMF.
The reaction of depositors was to get “a bit nervous” said Anna Samarina, PrivatBank’s chief financial officer.
The bank suffered deposit outflows of 8 billion hryvnia ($303 million) across a number of currencies in the weeks after the ruling, Samarina said.
“As of today, we managed to recover part of that, but we are not back to previous levels,” she added.
PrivatBank is embroiled in a number of court tussles in the United States, Britain, Cyprus and Ukraine, both as claimant and defendant, which Samarina said had driven up its legal costs.
“Up to 10% of the bank’s operating costs are now dedicated to legal costs,” she told Reuters on the sidelines of a Ukraine investment conference.
Days after the Kiev court ruling, the saga took a new twist with Volodymyr Zelenskiy’s election as Ukraine president. Zelenskiy had business ties with former PrivatBank owner Kolomoisky but has denied he would hand the bank back to him or pay state compensation.
The new president has delivered strong messages on the need to protect the taxpayers’ interest and stands by the correctness of the decision to nationalise the bank, PrivatBank supervisory board member Artem Shevalov said on the sidelines of the conference.
“There has been no interference from the new presidential team in the operations of PrivatBank,” Shevalov added. ($1 = 26.4445 hryvnias) (Reporting by Karin Strohecker Editing by David Goodman)
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