You're reading: Ukraine’s central bank declares Russian-owned VTB bankrupt

The National Bank of Ukraine declared Russian-owned VTB Bank as insolvent on Nov. 27.

The decision was attributed to problems with the bank’s liquidity. The central bank is planning to appoint temporary administration to run VTB before its assets are transferred under the Deposit Guarantee Fund’s authority.

Vyacheslav Sadovychny, chief editor of the Financial Club business publication, told the Kyiv Post that as of Nov. 1, VTB Bank had Hr 20 million in cash and about Hr 16 million on current accounts, and its debt to individuals and legal entities amounted to Hr 1.8 billion and Hr 1.2 billion, respectively.

He said that VTB Bank had been having liquidity problems in Ukraine due to the sanctions and asset freezes imposed on Russian banks. The decision came amid Ukraine’s introduction of martial law after Russia attacked and seized three Ukrainian Navy boats on Nov. 25 after the Ukrainian vessels tried to go from the Black Sea into the Azov Sea through the Russian-controlled Kerch Strait.

In March 2017 Ukraine imposed sanctions on five Russian banks – VTB Bank, Sberbank, VS Bank, Prominvestbank and BM Bank.

They stipulated a ban on the transfer of funds between the banks and their affiliates and on the transfer of their funds abroad. As a result, the banks started negotiations on selling their assets in Ukraine.

In September, the Kyiv Court of Appeal also upheld a claim filed by oligarch Ihor Kolomoisky’s firms against Russian state banks VTB Bank, Prominvestbank and Sberbank due to the loss of Kolomoisky’s assets in Crimea as a result of Russia’s annexation of the peninsula. The court upheld a freeze on the Russian-owned banks’ assets.

VTB Bank said on Nov. 27 it would sue President Petro Poroshenko over the asset freeze, claiming that their property rights have been violated. The connection between the bank and Poroshenko is not clear.

Meanwhile, Central African Republic landed a windfall on Nov. 27, when Russia’s VTB Bank mentioned in a financial report statement that it had lent the country Hr 12 billion, according to the Russian central bank, Reuters news agency reported on Nov. 27. The bank then said it was a clerical error and such a loan did not take place.