Nationalization of “Private” showed Italy how to save the banks – Bloomberg

Nationalization of “Private” showed Italy how to save the banks – Bloomberg

© Reuters

Despite the fact that Ukraine still needs to resolve several issues, it can still serve as an example for Europe.

The nationalization of the largest Bank cannot be called a happy event, but if it still has to be done, do it quickly.

This writes Marcus Ashworth in the article “Ukraine showed Italy how to save the banks” published on the website

Last weekend Ukraine together with the International monetary Fund – had acted quickly to clean its banking system has taken control of “Privat”, provided stability for depositors and prevent systemic risk.

See also: the Nationalization of “Privat” was the end of the banking crisis in Ukraine – the economist Atlantic Council

It was necessary to cover the lack of capital in the amount of $ 5.5 billion, a big hole for such a fragile economy with $ 15 billion of reserves at the Central Bank. The share of “PrivatBank” account for half of payments in the banking system of Ukraine and one-fifth of its Bank assets. The deposits exceed $ 8 billion, of which three quarters are private deposits, and here it is given priority.

The European Union and Italy should take note of this, at a time when they are desperately trying to find a solution for the Bank Monte dei Paschi (Banca Monte dei Paschi di Siena SpA). One of the main tasks is to persuade private holders of minor debt to swap it for shares.

This would reduce the amount that would have to Monte Paschi in concurrent placement of shares is the most difficult part of the plan to raise funds worth 5 billion euros ($ 5.2 billion). He needs capital to cover the 30 billion euros in bad loans that would allow the oldest Bank in the world to fight on.

Nationalization of “PrivatBank” completed

TSN. Pdsmi day
Today, 00:17

Add to favourites

This was announced at a briefing in the national Bank. Overnight, the government promised to form a new leadership. For a half day transition period had some business. Corporate account financial institution serving is minimal. With electronic transactions it’s all right.

EU rules on state involvement in the rescue of banks (Directive on the restructuring and rehabilitation of banks) have created almost an impossible situation where all parties involved stand in the way of each other, and the state cannot act alone. But, as usual, the most important is how you treat the debt holders.

Ukraine, by contrast, took decisive measures, involving private owners of bonds and shares. It will attract three types of priority Eurobonds PrivatBank, which make up just over 5% of liabilities, in the amount of $ 555 million, There is concern that then these bonds can be converted into shares, which will help to displace the holders, although international lenders are unlikely to agree to it without objection, says Oksana Reinhardt from MINT Partners.

Also read: the Council authorized the additional guarantee to depositors of “Privat”

Ukraine will need to exercise caution in relation to international holders of senior debt, as did the former owners of “PrivatBank”, which received 97 percent of its corporate loans and owned many bonds. The country plans to enter the international bond markets about a year, so she will have to prove goodwill.

Despite the fact that Ukraine still needs to resolve several issues, it can still serve as an example for Europe. The EU also wants to during the rescue of banks by the private sector to share risks.

The Parliament adopted the presidential bill on additional guarantees to depositors “PrivatBank”

TSN. Pdsmi day
Today, 00:15

Add to favourites

It applies only to natural persons and ensures the return of deposits in more than 200 thousand hryvnia. Smaller deposits in case of bankruptcy the Bank will return the Deposit guarantee Fund. The bill was criticized in particular for the deterioration of the competitive conditions for commercial banks, which do not have such privileges.

Objectively, the biggest problem in Italy is to protect domestic bonds retail investors, so the situation is different. If Monte Paschi this week will not be able to exchange debt for shares, it is expected salvation from the state, in the amount of at least 15 billion euros.

See also: the lifting of the moratorium for legal entities and withdrawals at ATMs billion. Key news about “PrivatBank”

But it’s still nothing compared to the decisive measures taken by the Ukraine, and will require intricate transactions compensation for retail holders of minor debt – which it never would have had to offer in the first place.

The situation becomes even more complicated when different parts of the plan of salvation independent of each other, greatly increasing the risk of failure.

Of course, if reports in the Italian press are true, and Qatar, China and the Italian post are really ready to replenish capital, then you may be able to achieve success. But actually it could be simpler. The post-crisis regime of the EU, aimed at preventing the intervention of the state, has proved destructive, like a disease.

After that nationalizing “PrivatBank”? Meet MPs

Yesterday, 20:04

Add to favourites

Deputies of the Verkhovna Rada, in particular, semen Semenchenko, Yuri Birch and Vadim Novinsky, told TSN Daria Happy, what companies should be nationalized after the “PrivatBank”.