The Kyiv District Administrative Court has ruled that the nationalization of PrivatBank, Ukraine’s largest bank, was illegal. Ukraine’s National Bank said that it would appeal.

On April 18, the court decided behind closed doors that the Ministry of Finance and the National Bank had insufficient legal grounds to declare PrivatBank insolvent — the declaration led to the bank being taken over by the government in December 2016.

The court’s ruling was in favor of oligarch Ihor Kolomoisky, who previously owned PrivatBank along with his business partner, oligarch Gennadiy Boholyubov, and effectively canceled the December 2016 nationalization of the bank.

The panel of judges was comprised of Ihor Kachur, Volodymyr Keleberda, and Vitaliy Omelyokhin.

“This was a unanimous decision,” said Viktor Hryhorchuk, chief lawyer of the National Bank of Ukraine, or NBU.


The NBU announced it would appeal once it received a copy of the ruling of the Kyiv District Administrative Court. Rather oddly, the same court in September 2018 recognized the legitimacy of the NBU’s decision to declare PrivatBank insolvent. 

“The nationalization of PrivatBank was a forced step and took place in accordance with the current legislation,” said Kateryna Rozhkova, the first deputy head of the NBU. “The bank was recognized as insolvent due to extremely large fraudulent schemes worth over $5.5 billion,” she said.

Rozhkova also said that the cancellation of PrivatBank’s nationalization doesn’t mean that it will be returned to its former owners. There are also no grounds for the reimbursement of funds to them, given that at the time the bank was declared insolvent, its capital was negative, Rozhkova added.

Poroshenko assembled the National Security and Defense Council of Ukraine the same day due to the court’s decision.

Poroshenko asked the NBU to ensure that PrivatBank is functioning smoothly and to finance it, if necessary. He instructed the Finance Ministry to analyze the risks for Ukraine’s banking system and potential losses connected with the court ruling.


Poroshenko also asked the Prosecutor General’s Office and the Security Service of Ukraine to consider investigating the judges who canceled PrivatBank’s nationalization over a possibly unlawful ruling.

One of PrivatBank’s former owners, oligarch Ihor Kolomoisky has claimed in the past that he is entitled to some form of compensation because his property was expropriated from him, as he puts it. Recently, he said he did not want the bank back, but $2 billion that had been in its capital. Shortly after, he said that he actually wanted his previous shares of the bank to be returned to him.

Kolomoisky’s reaction

In a phone conversation with the Kyiv Post on April 18, Kolomoisky said he was satisfied with the ruling of the Kyiv District Administrative Court.

“It was an important trial. The court sorted things out and made a fair decision,” he said.

Kolomoisky maintains that the nationalization, spearheaded by the former chairwoman of the NBU, Valeria Gontareva, was illegal and that PrivatBank had met its liabilities. He claims that the real motive was President Petro Poroshenko’s aim to take control over the oligarch’s television channel 1+1.


There’s currently a slew of parallel litigations over PrivatBank in Ukrainian and London courts. Kolomoisky said he hopes for a positive for him outcome in other cases too.

“Our goal is to restore justice,” he said.

The Kyiv District Administrative Court ruling came only a few days before Ukrainians go to polling stations on April 21 to elect a president for the next five years: either incumbent President Petro Poroshenko or comedy actor Volodymyr Zelenskiy.

The Poroshenko campaign and the president’s supporters have alleged that Zelenskiy is the “puppet of Kolomoisky” and that the oligarch would use a Zelenskiy presidency to regain control of PrivatBank. Zelenskiy, whose shows are broadcast on Kolomoisky’s 1+1 television channel, denies this and says his relationship with the oligarch is strictly business.

Shortly after the court’s ruling, Zelenskiy’s campaign wrote on its Facebook page: “The judicial reform under Poroshenko in action. Instead of defending the interests of the state, the NBU is losing its court case regarding PrivatBank. Only one question: Who is Kolomoisky’s puppet after all?”

On April 15, during a meeting with the business community at the InterContinental Kyiv hotel, Poroshenko said that he was “shocked” by Kolomoisky’s demand to be compensated for PrivatBank.


“This question is already on the table. This is what awaits us. Also on the table is the court appeal regarding the recognition of the nationalization of the bank as illegal, which they (the previous owners) are trying to do very quickly before the presidential elections, so that then they can say that it happened without their involvement,” Poroshenko said. “It won’t work. A decision ruled in favor of the former owner will be a powerful blow to Ukraine’s cooperation with the (International Monetary Fund).”

Legal battle

PrivatBank – Ukraine’s largest bank in terms of capitalization and client base – failed a stress test in 2016 that forced the government to conclude that the bank was on the verge of insolvency. The bank was taken under the temporary control of the Deposit Guarantee Fund on Dec. 18, 2016. Three days later, the Ministry of Finance acquired 100 percent of the stakes from the fund for Hr 1.

The nationalization of PrivatBank was strongly supported by the IMF, and part of the fund’s Extended Fund Facility with Ukraine in order to receive further financing.

Ukraine’s most committed international partners such as the United States and the European Union both stated that they are “closely monitoring developments” regarding PrivatBank.

Kolomoisky filed a lawsuit against the Ukrainian government over the legitimacy of PrivatBank’s nationalization in summer of 2017. 


In addition, the oligarch and a Cyprus-registered firm Triantal Investments LTD filed another claim to regain their PrivatBank stakes. Before the nationalization, Kolomoisky owned 41.6 percent of the shares, while Triantal Investments LTD owned 16.5 percent.

The last hearing in this case at the Commercial Court of Kyiv was postponed from April 16 until May 7.

In 2018, New York-based consulting firm Kroll conducted a forensic audit that uncovered a “large-scale and coordinated fraud” scheme that emptied $5.5 billion from the bank’s vaults, the National Bank of Ukraine, or NBU, said in a statement.

The Ukrainian government sued PrivatBank’s previous owners, Kolomoisky and Boholyubov, in the London High Court for alleged massive fraud in an attempt to recover billions of dollars that Kyiv claims were embezzled by the two oligarchs. However, in November 2018, the judge reviewing the case ruled that the London court did not have jurisdiction over the matter. PrivatBank appealed.

Kyiv’s Pechersk District Court also recently ordered the seizure of assets belonging to a number of companies connected to Kolomoisky.


The order was issued under a criminal case opened earlier over the embezzlement of over Hr 19 billion ($700 million) in refinancing funds issued to PrivatBank by the NBU.

Read more: Privatbank’s $3-billion lawsuit against PwC

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