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26 Oct, 2022 17:55

Ukrainian banks can be bought out for two cents

A new law allows the government to purchase any lender it deems “insolvent,” according to an official statement
Ukrainian banks can be bought out for two cents

Ukrainian President Vladimir Zelensky has signed a decree that will allow for strategic banks to be nationalized if deemed insolvent, according to a document published on the parliament’s website on Wednesday.

The legislation enables banks declared insolvent to be bought out for a symbolic price of 1 hryvnia (less than $0.03) and subsequently nationalized. Currently, there are 14 banks classified as systemically important in Ukraine, a list that includes both private and state-owned financial institutions.

“The state, represented by the Ministry of Finance of Ukraine, participates in the removal from the market of a systemically important bank if the National Bank of Ukraine decides to classify it as ‘insolvent’,” the statement reads.

Once the central bank recognizes a bank as insolvent, it is obliged to notify the lender itself, as well as the government. The decision to nationalize a bank will be made by the Cabinet of Ministers.

Once a lender is declared insolvent, it will be sold for 1 hryvnia regardless of the actual size of the bank's regulatory capital. If the bank is shown to be worth more than 1 hryvnia, the law envisages shareholders being repaid from Russian compensation for the damage caused in Ukraine.

For more stories on economy & finance visit RT's business section

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