Insolvency is spreading through Ukraine's banking sector. On Feb. 6, the National Bank of Ukraine declared Nadra, the nation's 11th largest bank, insolvent.
It didn’t pass the stress test and failed to comply with legal norms, NBU said in an official statement.
With the massive deposit outflow and companies’ unwillingness to borrow at high rates, banking is not easy. The hryvnia lost 23 percent of its value since the beginning of the year and fell to 25.2 against the U.S. dollar on the interbank market, rendering financial planning difficult. The population remains in a panicky mood.
Belonging to multimillionaire Dmytro Firtash, Nadra already went through temporary administration in 2009-2011 after the global financial crisis.
As of early 2015, Nadra had a book value of $164 million, while last year losses stood at $55 million. In 2013, it had almost $300,000 of net profit.
The interest rates on deposit are reaching 24 percent for hryvnia denominated accounts.
The NBU reports that 99 percent of Nadra depositors will have their money, some $180 million, paid back by the state Deposit Guarantee Fund. The insurance covers deposits up to Hr 200,000.
Firtash was promoting the Nadra brand through sponsorship of Dynamo, a football club in Kyiv that currently leads the local league, and whose players were wearing jerseys with the Nadra logo on it. Therefore, the Nadra insolvency also damages Dynamo’s brand.
In February, Firtash paid as much as $100 million to buy out the 30 percent stake in Inter, Ukraine’s major television station that he has a majority stake in, from Russian state-owned Pervy Kanal. Sergiy Lyovochkin, a member of parliament and head of Viktor Yanukovych-era Presidential Administration, also has a stake in a channel that was criticized for broadcasting Russian media content.
By some reason, an oligarch saw buying out the stake in a television station at a premium price more important than providing liquidity for his major banking asset. Inter used to include pieces on Firtash’s charity activity in its daily news reports.
Kyiv Post associate business editor Ivan Verstyuk can be reached at [email protected].
