You're reading: Government to recapitalize Bank Kyiv, Ukrgasbank and Rodovid Bank

The Ukrainian government decided at a meeting on Wednesday to allocate UAH 9.572 billion ($1.3 billion) for an increase in charter capital at Ukrgasbank, Rodovid Bank and Kyiv Bank, three of the country's mainstream banks that have suffered the most from the financial crisis, Prime Minister Yulia Tymoshenko said at a press conference in Kyiv.

“Essentially, these banks will become state-owned starting from today. The government along with the National Bank needs to do everything to demonstrate the success of these banks and the success of this project,” she said.

The government will inject UAH 3.2 billion into Ukrgasbank and receive an 84.21% stake in its charter capital, UAH 2.809 billion in Rodovid Bank and get a 99.97% stake and UAH 3.563 billion in Kyiv Bank and gain a 99.93% interest, she said.

All the legal documents on the transactions should be completed by the end of the week, and new managers from the government will start working at the banks next week, she said.

State budget funds will be used to top off these banks’ capital under agreement with the International Monetary Fund.

The Ukrainian authorities have been considering the issue of financial support to banks since fall 2008, but only state-owned Ukreximbank and Oschadbank have received additional funds from the budget to boost capital. Representatives of the IMF and the World Bank have been calling on Ukraine to accelerate this process. The state budget for 2009 envisions the allocation of UAH 44 billion for the recapitalization of commercial banks.