Zelensky approves sell-off of Ukrainian state banks

Ukrainian leader Vladimir Zelensky has signed a law on the privatization of state-owned banks. The relevant document was published on the website of the Verkhovna Rada on Thursday.

According to local media, citing MP Yaroslav Zheleznyak, the legislation, adopted by the Rada on September 19, is aimed at reducing the state’s presence in the banking sector. This is one of the requirements of the World Bank and is a mandatory condition for providing loans to Kiev.

Ukraine’s $15.6 billion IMF loan program also calls for bank privatizations and these will be key to unlocking new tranches of aid.

The new law is reportedly also designed to attract potential investors. According to the National News Agency of Ukraine, the new rules expand the range of potential investors and allows for the sale of any state share (previously just 100% of the share) in a bank.

They also update the regulations for setting the price and conducting auctions in accordance with the World Bank’s recommendations. The participation of former shareholders in privatization will also be prohibited.

The law applies to all state-owned banks, including PrivatBank and Ukrgasbank, as well as Sense Bank, PINbank, and Motor-Bank, which were nationalized after 2022. Oschadbank and Ukreximbank are reportedly the two exceptions.

National Bank of Ukraine (NBU) Governor Andrey Pyshny told local media on Thursday that Sense Bank and Ukrgasbank are “two priority banks for starting the privatization process involving a consultant, who will have to choose the best options.”

The State Property Fund of Ukraine unveiled a so-called large-scale Privatisation-2024 project in July, seeking to attract strategic investors and stimulate economic growth through the privatization of state-owned assets.

The move comes at a time when the Ukrainian government is struggling to bolster the national budget and stabilize the ailing economy amid its conflict with Russia. In September, the government adopted its draft budget for 2025, predicting a deficit of 75%.

Newspaper Vedomosti reported in September, citing data from Kiev’s Finance Ministry, that the flow of Western funds into Ukraine’s state budget had almost halved compared to last year.