The court upheld the impossibility of judicial appeal of PrivatBank’s bail-in procedure

The Supreme Court closed the proceedings in the case on the claim of the Surkis companies, not allowing them to recover more than $150 million from the state bank, which was in the deposits of these companies and was converted into shares of PrivatBank during its withdrawal from the market with the participation of the state in December 2016 (bail-in procedure).

This is reported by UNN with reference to the press service of the National Bank of Ukraine.

DetailsIt is noted that the lawsuit was filed against the National Bank, the Ministry of Finance, the Deposit Guarantee Fund for Individuals and PrivatBank. In fact, the Supreme Court has once again confirmed that the bail-in procedure of PrivatBank is not subject to judicial appeal.

In particular, the Supreme Court excluded from the decision of the court of appeal the conclusions and clarifications that the claims for invalidation from the moment of concluding contracts for the purchase of shares and acts of acceptance and transfer under these contracts, the contract for the sale and purchase of PrivatBank shares, the act of fulfillment of obligations under this contract and for the recovery of funds from PrivatBank in favor of the plaintiffs are subject to resolution in the order of economic proceedings in this case.

The National Bank welcomes the decision in which the Supreme Court made conclusions that indicate the stability of the formed position, according to which the decision of the National Bank on identifying related parties and the bail-in procedure cannot be appealed in court in any jurisdiction

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Also, Solvita Deglava, a member of the board for reorganization and problem assets of PrivatBank, said that this lawsuit is one of four court cases of the Surkis family and related companies against PrivatBank regarding challenging the legality of bail-in during nationalization, which are being considered in the courts of Ukraine and Cyprus.

Let us remind youThe Cabinet of Ministers of Ukraine decided to enter the state into the capital of PrivatBank on December 18, 2016. The transfer of PrivatBank to state ownership took place in accordance with Art. 411 of the Law of Ukraine “On the Deposit Guarantee System for Individuals”. This decision helped to avoid systemic risks for the banking sector and became a guarantee of maintaining financial stability in the country. The state spent more than UAH 155 billion on the recapitalization of PrivatBank.

ReferenceBail-in procedure/operation – forced conversion of deposits of bank shareholders and related parties into new shares. This procedure is used to “rehabilitate” an insolvent bank.

AdditionAccording to a study by YouControl, Ukrainian banks continue to remain under the influence of the state, foreign capital and large business groups. The state controls the five largest banks in terms of authorized capital, while almost half of the institutions have foreign shareholders. At the same time, some banks are associated with well-known politicians and large corporations, which affects their activities and financial stability.