On June 21, 2023, amidst Russia’s attack on Ukraine, a man passes by a branch of Sense Bank in central Kyiv. The National Bank of Ukraine (NBU) announced its decision to nationalize Sense Bank, one of the top commercial banks in the country, and place it under temporary administration. This move comes as part of Ukraine’s economic response to Moscow’s invasion, with Kyiv imposing sanctions on Russia and opening court cases to seize assets held by the Russian state and Kremlin-affiliated businessmen in Ukraine.
Sense Bank, formerly known as Alfa-Bank Ukraine, is ranked as Ukraine’s 10th largest bank in terms of assets and is considered systemically important. The NBU emphasized that the nationalization process will be conducted smoothly and will not have any noticeable impact on clients.
The central bank stated that Sense Bank’s owners’ connections with Russia pose a significant reputational risk and have negatively affected the bank’s activities. The bank’s regulatory capital saw a 50% decline between March 1, 2022, and July 1, 2023, while other systemically important banks experienced a 29% growth in the same period.
Sense Bank is majority-owned by ABH Holdings S.A., in which Ukrainian-born Russian-Israeli businessman Mikhail Fridman holds a 32.86% stake, and Russian magnate Petr Aven holds 12.4%. The bank reported losses of 7 billion hryvnias ($189.75 million) in 2022.
President Volodymyr Zelenskiy expressed support for the central bank’s decision, emphasizing the importance of financial stability and justice. Zelenskiy urged the cabinet of ministers to consider the central bank’s proposals and take immediate action.
The Ukrainian financial sector and banking system have demonstrated remarkable resilience during the ongoing war, thanks to the policies and strong financial support from Kyiv’s Western partners.
The central bank officials have discussed their plans to nationalize Sense Bank with the International Monetary Fund, Ukraine’s key lender. The government’s decision on nationalization is expected to be made on Friday, and all necessary steps for the process should be completed over the weekend.
Mikhail Fridman and Petr Aven, long-term partners in various industries including oil, banking, and retail, face Western sanctions due to their alleged ties to the Kremlin following Russia’s invasion of Ukraine. Fridman, who was born in western Ukraine during the Soviet era, has referred to the war in Ukraine as a tragedy.
(USD 1 = 36.8910 hryvnias)
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Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.
