Ukraine leader urges calm after bank nationalised

KIEV: Ukrainian President Petro Poroshenko urged people not to panic on Monday after his government nationalised the country’s largest private bank to try and avoid a rapid financial meltdown.
The former Soviet republic’s cabinet on Sunday took over PrivatBank — a lender that held one-third of Ukrainians’ savings and had branches in the Baltic states.
The bank was owned by Poroshenko’s political foe Igor Kolomoyskiy. The billionaire was reportedly heavily burdened by debt because of dubious loans the lender made to his cronies.
Kiev’s decision falls in line with the International Monetary Fund’s demand for Ukraine to clean up and stabilise its murky financial sector and seek sustainable growth. The IMF welcomed the government’s action.
But the nationalisation has created public unease about people’s holdings and whether the country might enter another economic crisis similar to when Russia annexed Ukraine’s Crimea peninsula in March 2014.
A subsequent 31-month war with pro-Russia insurgents in the separatist east claimed nearly 10,000 lives and seen the economy shrink by about 17 per cent in 2014-15. Inflation soared to just under 50 per cent last year.
Poroshenko, a pro-Western leader, said in a statement that the situation was under his full control.
“I appeal to you, dear PrivatBank clients — keep calm,” he said. “The new (state) administration is already taking over the levers of power — right now, this very hour and minute.”
Ukraine’s central bank had wanted Kolomoyskiy to refinance his bank with billions of dollars if he wanted to remain its owner.
There were fears that PrivatBank’s fall could have ignited a wider crisis in the financial system akin to the turbulence in the United States in 2008.
But the tycoon never came up with the money and Kiev’s patience snapped on Sunday.
Finance Minister Oleksandr Danyluk said the government’s decision “will help preserve the savings of nearly 20 million PrivatBank clients”.
“All of our international partners support this move, including the International Monetary Fund (IMF), the European Bank for Reconstruction and Development, as well as the government of the United States,” the finance minister said.
IMF chief Christine Lagarde hailed the Ukrainian government’s actions as “an important step in their efforts to safeguard financial stability”. — AFP