Dmytro Firtash, a Ukrainian business tycoon with ties to President Viktor Yanukovych, has acquired the troubled Nadra Bank, expanding a business empire that was under attack when Yulia Tymoshenko was prime minister.
The $440 million acquisition of 90 percent of Nadra, which has been under National Bank of Ukraine administration since 2009, gives Firtash a foothold in the country’s financial sector to add to his considerable domestic and foreign interests in chemicals, natural gas and media.
The purchase comes after Firtash was last month summoned by a U.S. court to answer a lawsuit filed by Tymoshenko, a bitter foe of the controversial businessman and the president, ousted shortly after Yanukovych defeated her in the presidential election. She alleges that Firtash colluded with the government to defraud Ukraine of some $3 billion worth of natural gas.
Both he and the government deny any wrongdoing.
Firtash acquired the controlling stake in Nadra through his Austria-registered Centragas Holding which bought an entire additional stock issue by the bank making up 89.97 percent of its shares for 3.5 billion hryvnias ($440 million), Nadra said in a statement.
With assets of Hr 22.9 billion, Nadra is Ukraine’s 11th largest bank. It has restructured its foreign debt with significant write-offs after going into default in 2009, Reuters reported.
Ukraine’s central bank has pumped in more than $1 billion in loans and other assistance since 2008 to keep the bank afloat – and another $600 million may be needed to make it a viable institution, according to government and International Monetary Fund estimates.
Although questions of transparency remain an issue, Dragon Capital investment bank analysts wrote favorably about the acquisition: “We consider this news positively, as the first step towards recapitalization has now been completed. However, we are still waiting for the government to announce the remaining recapitalization needs and the financing sources.”
Angry depositors have long battled to get their cash returned, which required intervention from the government amid investigations into alleged financial mismanagement at the bank. The bank’s former chief executive officer, Ihor Gilenko, and other ex-bank officials remain fugitives from justice after prosecutors charged them with embezzlement.
Last year, the bank owed depositors an estimated $1 billion to depositors, including individuals and commercial entities, according to Ihor Stepanov, coordinator for the United Independent Committee of Depositor.
There have been no public statements about the bank’s plans to repay depositors.
The purchase by Firtash was given the go-ahead by the central bank, which had been looking for an investor.
Cleaning up Nadra has been one of several key conditions set by the IMF in exchange for a credit line of up to $15 billion. The IMF has called upon Ukraine to either shut down the bank, in turn selling off its assets, or to find a new investor that could recapitalize it.
Despite bringing in Firtash to save Nadra, questions linger over what went wrong at the bank and why Firtash – long considered an investor in it – would be interested in buying it.
Alexander Valchyshen, head of research at Investment Capital Ukraine, told the Financial Times that Firtash would use the bank to service his business empire’s cash flow. He added that he could use his media outlets to improve the bank’s damaged reputation and use cash from depositors to finance his other businesses.
Firtash achieved prominence as a co-owner along with Russia’s gas giant Gazprom of RosUkrEnergo, a Swiss-registered gas trader that was ousted from the multibillion-dollar gas trade between Russia and Ukraine in 2009 by Tymoshenko.
Since Yanukovych came to power, Tymoshenko has come under criminal investigation by prosecutors for alleged financial wrongdoings while she was prime minister from 2007 to 2010. One probe is looking into her role in concluding the deal with Russia in 2009, removing RosUkrEnergo and securing a new gas contract between the two countries, which the government has complained sets the price of gas too high. She denies wrongdoing.
The accusations and counter-attacks relate to the 2009 deal with Russia, which allowed Ukraine’s state gas company Naftogaz to seize 11 billion cubic meters of gas from RosUkrEnergo. An international court ruled the move illegal last year, forcing Naftogaz to return around $3 billion of gas to RosUkrEnergo.
Tymoshenko claimed that Firtash and the government colluded to ensure RosUkrEnergo won the case, at the expense of state-owned Naftogaz. Firtash, who has close ties to Yanukovych’s inner circle, has also acquired three major chemicals plants since the president took power.
Showing posts with label Bank. Show all posts
Showing posts with label Bank. Show all posts
Sunday, 15 May 2011
Saturday, 20 March 2010
Russian bank secrecy under threat
A new draft law designed to help the introduction of a customs union between Russia, Kazakhstan and Belarus is being criticised for allowing authorities unprecedented access to private bank accounts, and possibly compromising secret information.
The modifications to existing customs law were placed on the Federal Customs Service website last week and are now being examined by anti-corruption experts.
The three-country union is expected to become a full-fledged "single economic space" by 2012. Updating their joint customs regulations is seen as aiding the trio's bid to join the World Trade Organisation as a single union, as decided by the leaders of three countries in 2008. The customs union already functions in part: since January of this year all tariffs of the member-countries have been unified.
But some experts say that the new law as drafted might infringe on the interests of the three countries' banks. The stumbling block is Article 168, which challenges the bank secrecy of individuals and companies involved in international trade. Specifically, the article says that "Banks and other credit organizations must submit, upon customs inquiry, all data related to monetary traffic in the accounts of organizations, including bank secrecy information."
According to Article 26 of the Federal Law on Banks and Banking Activity, information on bank clients' accounts and correspondent accounts, as well as deposits, operations and private information about clients, is confidential.
Anatoly Aksakov, president of the Association of Regional Banks, said the draft law represented "a dangerous tendency" that "may scare potential and existing bank clients." And it is through such customs inquiries, said Aksakov, "that such information, as practice has shown, may get into the hands not just of officials but of criminal elements as well."
"Beyond this, the draft law will mean an additional burden on banks. We have to watch such initiatives very carefully and keep them within bounds," said Aksakov.
"The customs service reliably protects state and commercial secrets," insisted FCS representative Dmitry Kotikov. "We have all the technical means necessary to keep secret information out of the reach of third parties; these mechanisms have been working for a long time."
Maria Medvedeva, head of the Banks Analysts Club, called the FCS initiative "unpleasant news" for the Russian banking community and noted that banks have been already providing law enforcement and tax authorities with the information they required.
"It wouldn't be proper to deprive the FCS of the opportunity to get information [on suspects], but customs have to obtain such data through court procedures," said Medvedeva.
Medvedeva added that banks are already in charge of preparing the so-called "transaction passports" of export-import deals. "The FCS wants to expand the scope of [this] information. And law-abiding companies, clients of Russian banks, might not like it," said Medvedeva.
Leonid Slipchenko, a banking analyst at Uralsib, said that it may take time to pass the bill.
"Article 168 of the new FCS law is too tough in its current draft form," said Slipchenko.
The draft "represents operational and reputational risks for banks and should be additionally coordinated with other customs union' member-countries."
Saturday, 7 February 2009
State offers $40Bln bank aid
The government has signalled a shift in its anti-crisis strategy, switching up to $40 billion intended for industry bailouts into propping up the banking system.
The shift in policy - apparently prompted by a worsening oil price outlook - will also see the federal budget slashed in the next few days, according to top government economic officials.
We have made a decision to cut considerably government spending, which will be approved in the coming days. We could have lived through the year 2009 by spending reserves but we consider this policy to be unreasonable," First Deputy Prime Minister Igor Shuvalov told an investment forum in Moscow.
To add fuel to the fire, Fitch, the international ratings agency, has downgraded Russia's long term grade as a warning that it must take a more sustainable approach to government spending and the rouble.
Chris Weafer, UralSib's chief strategist, stated that it is most likely to be new infrastructure projects and the development of new industries that will be delayed as the government seeks to avoid redundancies.
"The whole focus of the budget is to maintain employment as high as possible and the government is trying to make it a condition of the bailout packages that companies minimise the number of people they lay off," he said.
Despite the government's focus on employment, it is inevitable that companies will be forced into redundancies to survive the crisis, he said.
"These companies are going to have to make the adjustments they need to survive," said Weafer.
"That means laying people off but there will be pressure on these firms to only cut the people they need to."
He added that the unemployment rate would hit 10 per cent by the end of March and that new jobs that would have been created by new projects will now be put on hold until the crisis eases.
Other analysts have suggested that the cutbacks will not be too extensive as the government will run a budget deficit to fund projects.
"They are going to try and limit the cuts as much as possible," said Roland Nash, chief strategist at Renaissance Capital.
Some experts say there is a limit to how large a deficit the government can run - as it would create financial instability.
"Clearly the fiscal deficit is a risk factor. In 2009, there is a danger state expenditure will be a source of capital outflow," said Natalya Orlova, chief economist at Alfa Bank. She warned that if the deficit is over 5 per cent it would cause the government to spend too much of its reserves in the short run.
Although industry will now receive $40 billion less in direct bailouts from the government, Finance Minister Alexei Kudrin has moved to ensure it reaches companies in need of cash.
"We are preparing the banking package but with the condition that the funds will be passed onto the real economy," he told a news conference in London.
Supporting the banking sector has been a key part of the government's anti-crisis strategy, as they are needed to finance loans for companies short of liquidity.
"Unless you fix the banking sector no money is going to get to the real economy," Nash said.
Fitch's downgrade of Russia's sovereign rating from BBB+ to BBB has been seen as warning that Russia cannot continue spending its currency reserves and must adjust to the economic reality of lower oil prices.
"The reserve figures have come down very fast and the decline in the economy has come at a fast pace," said Weafer. "(Fitch) have highlighted the fact that if the government doesn't take the right, conservative action right now, then they believe the situation could deteriorate much further."
The shift in policy - apparently prompted by a worsening oil price outlook - will also see the federal budget slashed in the next few days, according to top government economic officials.
We have made a decision to cut considerably government spending, which will be approved in the coming days. We could have lived through the year 2009 by spending reserves but we consider this policy to be unreasonable," First Deputy Prime Minister Igor Shuvalov told an investment forum in Moscow.
To add fuel to the fire, Fitch, the international ratings agency, has downgraded Russia's long term grade as a warning that it must take a more sustainable approach to government spending and the rouble.
Chris Weafer, UralSib's chief strategist, stated that it is most likely to be new infrastructure projects and the development of new industries that will be delayed as the government seeks to avoid redundancies.
"The whole focus of the budget is to maintain employment as high as possible and the government is trying to make it a condition of the bailout packages that companies minimise the number of people they lay off," he said.
Despite the government's focus on employment, it is inevitable that companies will be forced into redundancies to survive the crisis, he said.
"These companies are going to have to make the adjustments they need to survive," said Weafer.
"That means laying people off but there will be pressure on these firms to only cut the people they need to."
He added that the unemployment rate would hit 10 per cent by the end of March and that new jobs that would have been created by new projects will now be put on hold until the crisis eases.
Other analysts have suggested that the cutbacks will not be too extensive as the government will run a budget deficit to fund projects.
"They are going to try and limit the cuts as much as possible," said Roland Nash, chief strategist at Renaissance Capital.
Some experts say there is a limit to how large a deficit the government can run - as it would create financial instability.
"Clearly the fiscal deficit is a risk factor. In 2009, there is a danger state expenditure will be a source of capital outflow," said Natalya Orlova, chief economist at Alfa Bank. She warned that if the deficit is over 5 per cent it would cause the government to spend too much of its reserves in the short run.
Although industry will now receive $40 billion less in direct bailouts from the government, Finance Minister Alexei Kudrin has moved to ensure it reaches companies in need of cash.
"We are preparing the banking package but with the condition that the funds will be passed onto the real economy," he told a news conference in London.
Supporting the banking sector has been a key part of the government's anti-crisis strategy, as they are needed to finance loans for companies short of liquidity.
"Unless you fix the banking sector no money is going to get to the real economy," Nash said.
Fitch's downgrade of Russia's sovereign rating from BBB+ to BBB has been seen as warning that Russia cannot continue spending its currency reserves and must adjust to the economic reality of lower oil prices.
"The reserve figures have come down very fast and the decline in the economy has come at a fast pace," said Weafer. "(Fitch) have highlighted the fact that if the government doesn't take the right, conservative action right now, then they believe the situation could deteriorate much further."
Tuesday, 27 January 2009
Ukraine Assembly Fails Again To Oust Cbank Head
KIEV, Ukraine -- Ukraine's parliament failed again to oust Central Bank Chairman Volodymyr Stelmakh on Monday, passing a resolution annulling his tenure that was dismissed by the president's office as "unconstitutional".
This was the third attempt by Prime Minister Yulia Tymoshenko's faction in parliament to persuade President Viktor Yushchenko to sack the veteran chairman, blaming him for a fall in the hryvnia currency and the state of banks' refinancing.The two former allies have fought constantly on virtually all issues for months, delaying policy making just as the global financial crisis grips the ex-Soviet state.Under the constitution, only the president can initiate the dismissal of the central bank chief, which must then be approved by parliament. Although lukewarm towards the central bank, Yushchenko has refused to sack Stelmakh."This decision is illegal and unconstitutional," presidential spokeswoman Larysa Mudrak said by telephone.The central bank's top economic adviser, Valery Lytvytsky, said Stelmakh would continue in his job after returning from holiday. He was not able to say when that would be."He knows that he is the legal head of the central bank and he will continue work after his holiday," Lytvytsky said by telephone.A total of 227 members -- one more than the minimum needed -- approved the resolution. Parliament passed a no confidence vote in Stelmakh on Dec. 26 and again asked the president to dismiss him two weeks ago.By voting to rescind the 2004 appointment, Tymoshenko's bloc hoped to find another mechanism of getting rid of Stelmakh.Parliament also passed a resolution naming Yushchenko solely responsible for Ukraine's financial woes. Tymoshenko has called for his resignation in December.Lytvytsky said the central bank was currently under the control of First Deputy Chairman Anatoly Shapovalov."The market is not going to be overjoyed by this latest twist in the story, but we hope that it will remain calm thanks to our intervention aimed at maintaining the positive trend (of the hryvnia's rate)," Lytvytsky said.The hryvnia traded at 8.1 to the dollar, slightly weaker than last week when it stood at a touch stronger than 8/$.Dealers said the central bank had communicated its policy well in January with almost daily interventions that have injected liquidity and helped strengthen the hryvnia from December historic lows of 9.5-10/$.But parliament's very moves made them nervous."If management of the central bank changes, then there will be a question -- how will the bank behave?" said one dealer.
This was the third attempt by Prime Minister Yulia Tymoshenko's faction in parliament to persuade President Viktor Yushchenko to sack the veteran chairman, blaming him for a fall in the hryvnia currency and the state of banks' refinancing.The two former allies have fought constantly on virtually all issues for months, delaying policy making just as the global financial crisis grips the ex-Soviet state.Under the constitution, only the president can initiate the dismissal of the central bank chief, which must then be approved by parliament. Although lukewarm towards the central bank, Yushchenko has refused to sack Stelmakh."This decision is illegal and unconstitutional," presidential spokeswoman Larysa Mudrak said by telephone.The central bank's top economic adviser, Valery Lytvytsky, said Stelmakh would continue in his job after returning from holiday. He was not able to say when that would be."He knows that he is the legal head of the central bank and he will continue work after his holiday," Lytvytsky said by telephone.A total of 227 members -- one more than the minimum needed -- approved the resolution. Parliament passed a no confidence vote in Stelmakh on Dec. 26 and again asked the president to dismiss him two weeks ago.By voting to rescind the 2004 appointment, Tymoshenko's bloc hoped to find another mechanism of getting rid of Stelmakh.Parliament also passed a resolution naming Yushchenko solely responsible for Ukraine's financial woes. Tymoshenko has called for his resignation in December.Lytvytsky said the central bank was currently under the control of First Deputy Chairman Anatoly Shapovalov."The market is not going to be overjoyed by this latest twist in the story, but we hope that it will remain calm thanks to our intervention aimed at maintaining the positive trend (of the hryvnia's rate)," Lytvytsky said.The hryvnia traded at 8.1 to the dollar, slightly weaker than last week when it stood at a touch stronger than 8/$.Dealers said the central bank had communicated its policy well in January with almost daily interventions that have injected liquidity and helped strengthen the hryvnia from December historic lows of 9.5-10/$.But parliament's very moves made them nervous."If management of the central bank changes, then there will be a question -- how will the bank behave?" said one dealer.
Tuesday, 16 December 2008
Ukraine Bank Prominvest Receiver 'Blockaded'
KIEV, Ukraine -- The receiver of Ukraine's sixth-largest bank was trapped in his office on Monday and prevented from announcing a proposed plan to revive the bank with the government's involvement, a bank official said.
Members of parliament confined receiver Volodymyr Krotyuk to his office as he was due to address a news conference, Andriy Shvets, part of the receiver's team, told waiting reporters."The press conference cannot take place for technical reasons -- the management of the temporary administrators is blockaded by members of parliament," Shvets said.Shvets would not identify the parliamentarians blockading the receiver. The central bank declined all comment.Prominvest, in receivership since October after a run on its deposits, was to have been bought by an Austrian holding company, Slav AG, controlled by two Ukrainian members of parliament -- brothers Andriy and Serhiy Klyuyev.But the brothers failed to meet last week's deadline for payment.Before the news conference, Krotyuk's press service issued a statement saying international auditor Deloitte&Touche was studying the bank's finances "after which a realistic estimate of the size of bank's assets will be made"."After this assessment, the temporary administrator will establish a programme of financial revival with government participation and submit it for central bank approval," it said.The brothers agreed to increase Prominvest's capital by 900 million hryvnias ($120 million) via a share issue and raise an extra 3.6 billion hryvnias through deposits or subordinated debt but twice failed to meet payment deadlines.Prominvest said a steep fall in the value of the hryvnia currency had complicated the transaction. The last deadline set by the administrator for payment was Dec. 8.Prominvest remains barred from allowing withdrawals, affecting ordinary depositors and heavy industry businesses traditionally financed by the bank.Such blockades are not uncommon, especially in ownership rows. Ukraine's largest refinery was taken over by a former head and armed men last year and two years ago members of parliament blockaded the prosecutors office in a row over its top staff.
Members of parliament confined receiver Volodymyr Krotyuk to his office as he was due to address a news conference, Andriy Shvets, part of the receiver's team, told waiting reporters."The press conference cannot take place for technical reasons -- the management of the temporary administrators is blockaded by members of parliament," Shvets said.Shvets would not identify the parliamentarians blockading the receiver. The central bank declined all comment.Prominvest, in receivership since October after a run on its deposits, was to have been bought by an Austrian holding company, Slav AG, controlled by two Ukrainian members of parliament -- brothers Andriy and Serhiy Klyuyev.But the brothers failed to meet last week's deadline for payment.Before the news conference, Krotyuk's press service issued a statement saying international auditor Deloitte&Touche was studying the bank's finances "after which a realistic estimate of the size of bank's assets will be made"."After this assessment, the temporary administrator will establish a programme of financial revival with government participation and submit it for central bank approval," it said.The brothers agreed to increase Prominvest's capital by 900 million hryvnias ($120 million) via a share issue and raise an extra 3.6 billion hryvnias through deposits or subordinated debt but twice failed to meet payment deadlines.Prominvest said a steep fall in the value of the hryvnia currency had complicated the transaction. The last deadline set by the administrator for payment was Dec. 8.Prominvest remains barred from allowing withdrawals, affecting ordinary depositors and heavy industry businesses traditionally financed by the bank.Such blockades are not uncommon, especially in ownership rows. Ukraine's largest refinery was taken over by a former head and armed men last year and two years ago members of parliament blockaded the prosecutors office in a row over its top staff.
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