The conflict surrounding “Ukrtransnafta” might have been considered exhausted if Poroshenko hadn’t touched upon Kolomoisky’s interests in the banking sector. PrivatBank, which was 92% owned by Kolomoisky and his business partner Gennadiy Bogolyubov, was the largest Ukrainian bank. More than half of the adult population in Ukraine had accounts there. However, in 2015, the bank faced a minor issue.
The tripling depreciation of the national currency, following Yanukovych’s flight and the onset of war in Donbas, severely impacted the banking system. To avoid uncontrollable bank bankruptcies, the state regulator began cleaning up the financial market in 2015. During the year, 33 banks, which had almost no assets or were involved in money laundering schemes, lost their licenses. The National Bank also increased the reserve requirements for commercial banks.
An audit of PrivatBank revealed that it not only significantly exceeded the norm of insider loans (the bank loaned customer funds to Kolomoisky’s companies) but also needed recapitalization amounting to 113 billion hryvnias (about $5 billion). As of January 1, 2016, more than 80% of all PrivatBank’s loans were issued to companies affiliated with Kolomoisky. The absolute majority of these companies were shell companies without liquid assets for collateral.
The bank’s owners had 1.5 years to meet the regulator’s requirements. As Valeriya Gontareva, the former head of the National Bank of Ukraine (NBU), recalls, not much money was needed – about 3-4 billion hryvnias ($150-180 million). The main requirement of the National Bank was the re-registration of issued loans from shell firms to real companies with liquid assets instead of air. By April 2016, real collaterals worth 31 billion hryvnias needed to be transferred to PrivatBank’s balance sheet.
Instead of meeting the regulator’s conditions, Kolomoisky maximally delayed the negotiations. According to Minister of Finance Oleksandr Danyliuk, the oligarch proposed the state to partially buy the bank, maintain the old management, and provide guarantees against criminal prosecution. He also asked for a few months to resolve the problems.
Eventually, it became clear that Kolomoisky was not intending to increase capitalization or bring in liquid assets as collateral for previously issued loans. On December 18, 2016, the NBU declared PrivatBank insolvent, on December 21, all 100% of the bank’s shares were transferred to state ownership, and on December 23, a new management began work.
Three years later, explaining the reason for the nationalization of PrivatBank, Igor Kolomoisky blatantly lied. Since he couldn’t admit that his bank issued insider loans to shell companies and lacked the necessary reserves, the oligarch concocted his version of events. According to him, Poroshenko nationalized the bank because he wanted to control the “1+1” TV channel. But the president was mistaken, since PrivatBank owned a blocking stake in “1+1 Production,” not the TV channel itself, which holds the license for television broadcasting.
The outcome of this whole story was that Kolomoisky harbored a significant grudge against Poroshenko and still accuses the former president of taking away his business. On the other hand, it’s impossible to forget that the oligarch not only grossly violated the rules of conducting banking business but also never returned a large portion of the loans previously issued through PrivatBank, totaling more than $5 billion. By the time of nationalization, this figure was roughly equivalent to the bank’s value.