In response to Moscow’s extensive invasion in February 2022, Ukraine’s central bank announced plans to nationalise Sense Bank, a prominent Russian-owned commercial bank operating in the country. On Thursday, the National Bank of Ukraine (NBU) declared its decision to place the bank under temporary administration, describing it as “systemically important.” The NBU submitted a proposal to the government regarding the state’s involvement in the process.
NBU Governor Andriy Pyshnyi assured clients that the nationalisation would be executed “safely” and would not be discernible to them. Sense Bank, previously known as Alfa-Bank Ukraine, ranks as the country’s tenth-largest bank based on assets and holds a position on the list of systemically important banks, according to central bank data.
As part of its economic response to Russia’s invasion, Kyiv imposed sanctions on Russian entities and initiated legal actions to seize assets owned by the Russian state and individuals linked to the Kremlin in Ukraine. President Volodymyr Zelenskiy signed a law in June, granting the government authority to nationalise banks whose owners came under sanctions due to the invasion.
While President Zelenskiy acknowledged the central bank’s move in his nightly video address without explicitly naming Sense Bank, he urged the cabinet of ministers to promptly consider the central bank’s proposals and extend support to this financial institution in the interests of investors, financial stability, and justice.
The NBU cited Sense Bank’s owners’ connections with Russia as a “significant reputational risk,” having a notable adverse impact on the bank’s operations. The bank’s regulatory capital witnessed a considerable drop of 50% between March 1, 2022, and July 1, 2023, while other systemically important banks recorded a growth of around 29% during the same period.
Notably, Ukrainian-born Russian-Israeli businessman Mikhail Fridman holds a 32.86% stake in ABH Holdings S.A., the majority owner of Sense Bank, while Russian magnate Petr Aven owns 12.4%. Both businessmen are facing Western sanctions due to their alleged ties to the Kremlin following Russia’s invasion of Ukraine.
Despite the challenging geopolitical situation and the ongoing war, Ukraine’s financial sector and banking system have demonstrated remarkable resilience, thanks to robust policies from the central bank, government support, and strong financial backing from Western partners. The central bank officials have communicated their nationalisation plans to the International Monetary Fund, a key lender to the country. The government’s decision on the matter is anticipated on Friday, and all necessary steps for the bank’s nationalisation are expected to be finalized over the weekend.
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