Ukraine’s banking law: a step forward, but not a leap
A new law prohibiting the return of banks to their former owners will unlock international funding for Ukraine. But is it really the game changer some are claiming?
Ukraine has a new banking law. On May 21, with much fanfare, president Volodymyr Zelenskyy finally put his signature on the bill, which had been in the works since last autumn. His supporters, and many of Ukraine’s international backers, hailed it as a big step in the country’s reform process.
So, what is the new law, and why was it so important?
Briefly, it addresses the question of bank resolution, which has been a hot topic in Ukraine since the Maidan revolution of 2014.
In the following three years, more than half of the country’s 180 banks were closed as part of a clean-up of the sector and one – market leader PrivatBank, owned by Ihor Kolomoisky and Gennadiy Bogolyubov – was nationalized.
The new law ensures that none of these decisions can be reversed. It forbids the return of banks to their former shareholders and directs courts to respect the conclusions of the regulator, the National Bank of Ukraine (NBU), in this respect.
It allows for the payment of compensation to former owners but only on the basis of an assessment by international auditors.