Ukraine nationalized billionaire Fridman’s bank

National Bank of Ukraine (NBU) decided to withdraw Sense Bank, former Alfa-Bank Ukraine, from the market. The regulator asked the government to nationalize the credit institution.

According to the head of the NBU Andriy Pyshny, this will happen on Friday, July 21. From the same day, a temporary administration will be introduced in the bank. When the Council of Ministers decides on state participation in the withdrawal of Sense Bank from the market, it will complete the work within three days and transfer control to the new management.

Services for individuals will continue to operate as normal, and there are no plans to introduce restrictions on corporate payments.

The NBU reminded that the ultimate owners of Sense Bank are Russian businessmen Mikhail Fridman, Petr Aven and Andrei Kosogov, who were covered by Ukrainian sanctions. The first also has an Israeli passport, and the second a Latvian one, both entrepreneurs are on the blacklist EU, UK, Canada, Switzerland, Australia and New Zealand.

The regulator noted that Fridman and Aven’s ties to Russia, which carried out a “full-scale military invasion of Ukraine on February 24, 2022, and their support for actions and policies that threaten the territorial integrity, sovereignty and independence of Ukraine, pose significant reputational risk and have a significant negative impact on the bank’s operations.”

The NBU noted that from March 1, 2022 to July 1, 2023, Sense Bank’s regulatory capital decreased by 50%, while for other systemically important credit institutions it increased by 29%.

Sense Bank ranks 11th in Ukraine in terms of assets. Its nominal owners are ABH Holdings SA with its registered office in Luxembourg. and ABH Financial Limited based in Cyprus. They said they would stop any attempt to nationalize the bank, including going to international courts to “protect their investments and mitigate their losses”.

At the end of March, the NBU recognized the reputation of these companies as defective, and therefore they lost the right to dispose of Sense Bank shares and the right to vote at shareholders’ meetings when making any decisions. This put an end to the possible sale of the bank – earlier in the year ABH Holdings said that 75.6% of Sense Bank could be bought by a European investor, but did not disclose who exactly.

In June, Ukrainian President Volodymyr Zelensky signed a law on the procedure for transferring systemically important banks into state ownership during martial law. The document allows the government to declare insolvency and nationalize banks whose owners are subject to sanctions. ABH Holdings considered this law to be discriminatory and in violation of international law on investor fairness.