No reason to nationalize former Alfa-Bank, NBU says

9 January, 10:33 PM
Alfa-Bank Ukraine changed its name and brand to Sense Bank from December 1, 2022 (Photo:Sens Bank Press Service)

Alfa-Bank Ukraine changed its name and brand to Sense Bank from December 1, 2022 (Photo:Sens Bank Press Service)

The National Bank of Ukraine (NBU) doesn’t register risks of insolvency at Sense Bank (formerly Alfa-Bank Ukraine) and therefore doesn’t see reasons for its nationalization, First Deputy Head of NBU, Kateryna Rozhkova, told Ukrainian TV broadcasters on Jan. 9, as reported by news agency Interfax-Ukraine.

“The nationalization of a systemically important bank is only possible if this bank is declared insolvent,” said Rozhkova.

“ of today, we see no factors that would threaten Alfa-Bank’s solvency.”

NBU defines systemically important banks (SIBs) as “banks whose activity has an impact on the stability of the entire national banking system.”

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According to Rozhkova, should Sense Bank face liquidity crunch, the NBU will be forced to declare the bank insolvent and could then recommend the state takes ownership of the bank, in order to avoid financial market shocks.

On Dec. 1, 2022, Alfa-Bank Ukraine rebranded as Sense Bank.

NBU earlier confirmed the question of providing the bank with a liquidity stimulus was discussed, but never developed into concrete plans or proposals.

On Oct. 26, President of Ukraine Volodymyr Zelenskyy signed a law on a special procedure for withdrawing SIBs from the market under martial law. Subsequent media reports suggested the legislation was aimed specifically to Alfa-Bank Ukraine, as it was called then.

Earlier, Alfa-Bank's shareholders confirmed their willingness to recapitalize the bank by $1 billion or to transfer the shares to the state, or another state-authorized shareholder without compensation. This was mentioned in a letter written by the bank's co-owner Mikhail Fridman to the head of the NBU, Andriy Pyshny.

Fridman is one of the Russian oligarchs whose Western assets were frozen in 2022 over Russia’s invasion of Ukraine.

It was also reported that Fridman asked Monaco authorities to partially unfreeze his assets to enable him to recapitalize Alfa-Bank.

In early September, The Wall Street Journal reported that Russian oligarch Mikhail Fridman wanted to “bring in” $1 billion to Ukraine's Alfa-Bank, hoping the move would help lift personal sanctions against him.

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