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Ukraine takes steps to support nationalized Privatbank's liquidity

The National Bank of Ukraine issued a 15 billion Ukrainian hryvnia refinancing loan to the recently nationalized PAO KB Privatbank to support the lender's liquidity and ensure uninterrupted service to its customers.

The loan was granted for a term until Dec. 30, 2016, at an interest rate of 16% per year, the regulator said Dec. 20.

Interfax Ukraine reported, citing the central bank's deputy head, Kateryna Rozhkova, that the regulator is also ready to discuss the restructuring of Privatbank's debt. The bank's liabilities due to the central bank amount to 19 billion hryvnia, including 14 billion hryvnia of overdue debt, Interfax noted Dec. 20.

Reuters reported the same day that the Ukrainian parliament approved a bill ensuring full state guarantees to Privatbank's retail deposit holders in order to prevent deposit outflows. Only deposits held in state-owned PJSC State Savings Bank of Ukraine are currently fully covered by state guarantees, while deposits in other lenders are covered for up to 200,000 hryvnia by the Deposit Guarantee Fund.

Meanwhile, S&P Global Ratings on Dec. 21 lowered Privatbank's long- and short-term counterparty credit ratings to R/R from B-/C, reflecting regulatory risk stemming from its nationalization and a potential introduction of a moratorium on some of its credit obligations by the government.

There is no clarity as yet regarding a recapitalization plan for the lender, whose capital shortfall stands at 148 billion hryvnia, and it is possible that some of its credit obligations will be prioritized over others, the rating agency noted, pointing out Ukrainian Finance Minister Oleksandr Danyliuk's statement that the lender's eurobonds will be bailed in.

As of Dec. 20, US$1 was equivalent to 26.43 Ukrainian hryvnia.

S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.