Ukrainian Bank Files $600 Million Claim in Israel

KIEV (Reuters) -
The logo of PrivatBank is pictured outside its branch in Kiev, Ukraine. (Reuters/Valentyn Ogirenko)

Ukraine’s largest lender PrivatBank, which was nationalized in 2016, has launched more legal claims abroad for compensation against its former owners, escalating a battle viewed as a test of President Volodymyr Zelenskiy’s commitment to reform.

The bank said on Thursday it had started new litigation at the district court of Tel Aviv in Israel for a claim of $600 million.

It has also increased the amount of its claim in a separate case at the Chancery Court of Delaware in the United States.

PrivatBank made the announcement the same day as a court in Ukraine postponed hearing the authorities’ appeal in another case between the state and former PrivatBank owner Ihor Kolomoisky, who said the bank’s nationalization was illegal.

“Only three years ago, the state was forced to save the bank from bankruptcy, and the country from the financial crisis,” PrivatBank said in a statement.

“We appreciate all of those who provide support to our battle to ensure that justice will prevail for PrivatBank and the people of Ukraine,” it added.

Kolomoisky said in a text message that he had not been aware of the new claims being launched, and offered no other comment. He earlier told Reuters he expected a “fair verdict” on the case being heard in the Kiev court.

Ukraine’s decision to take PrivatBank into state hands as part of a donor-backed clean-up of the financial system has spawned hundreds of legal cases.

The government says shady lending practices under Kolomoisky caused billions of dollars of losses to PrivatBank. Kolomoisky denies wrongdoing and disputes the central bank’s characterization of PrivatBank’s finances.

A legal adviser for PrivatBank, Andriy Pozhidayev, said Thursday’s case was postponed until the court system could establish whether an administrative or commercial or other court should hear the case.

PrivatBank is seen as a test of President Zelenskiy’s reform agenda and willingness to tackle the deep-rooted vested interests that have long held back Ukraine’s development.

The bank’s fate is a crucial issue in negotiations with the International Monetary Fund, which has given conditional approval to a new loan deal worth $5.5 billion.

The central bank, which oversaw the nationalization, has accused Kolomoisky of disrupting its work and hampering negotiations with the IMF through protests and media smears.

Kolomoisky, whose broadcasting station carries the program that launched Zelenskiy’s political career, rejects the allegation.