Ukrainian President Volodymyr Zelensky has just signed an important law that allows the government to sell state-owned banks. This decision, announced on the Verkhovna Rada’s website, is a big step in changing how banks operate in Ukraine.
Why Is This Happening?
The law, which was passed by the Rada on September 19, aims to reduce the government’s involvement in the banking system. This move is part of Ukraine’s agreement with the World Bank, which has made privatizing these banks a requirement for providing financial help to the country. In fact, to access the $15.6 billion loan program from the International Monetary Fund (IMF), Ukraine must move forward with these privatizations.
What Does the Law Change?
The new law is designed to attract investors. It opens up opportunities for selling shares of state banks, not just the entire bank itself. This means that instead of having to sell 100% of a bank’s shares, the government can now sell smaller portions, making it more appealing for different kinds of investors.
The law also includes updates on how to set prices and conduct auctions for these bank shares. These changes align with the World Bank’s recommendations. One important rule in the new law is that previous bank owners are not allowed to participate in the privatization process, ensuring fresh investment.
Which Banks Are Affected?
This law applies to all state-owned banks, including well-known ones like PrivatBank and Ukrgasbank, along with several others like Sense Bank, PINbank, and Motor-Bank, which were nationalized after 2022. However, two major banks, Oschadbank and Ukreximbank, are exceptions and will not be privatized.
Andrey Pyshny, the Governor of the National Bank of Ukraine, has mentioned that Sense Bank and Ukrgasbank will be the first banks to start the privatization process. A consultant will help choose the best options for selling these banks.
Why Is This Important Now?
The decision to sell off state banks comes at a crucial time for Ukraine. The government is trying to stabilize its economy and improve its budget situation amid ongoing conflict with Russia. Recently, the government revealed plans for a “Privatization-2024” project, aiming to attract strategic investors and boost economic growth by selling state assets.
The economic situation in Ukraine is challenging. Recent reports show that Western financial support has significantly decreased, nearly halving compared to last year. The government is predicting a budget deficit of 75% for 2025, making these privatization efforts even more critical for the nation’s future.
What’s Next?
Zelensky’s approval to sell off state banks is a bold move that could reshape Ukraine’s financial landscape. As the government pushes forward with these changes, many are watching closely to see how it will impact both the economy and potential investors. Will this strategy bring the financial stability Ukraine needs, or will it lead to new challenges? Only time will tell.
