The Ministry of Finance of Ukraine, considering the uncertainty surrounding the sale process of Sens Bank, will establish a fully operational supervisory board for the financial institution, as stated in the document released following the 5th review of the updated Extended Fund Facility (EFF) program with the International Monetary Fund (IMF).
"In addition, independent assessments of the supervisory boards of Naftogaz and Ukrenergo are scheduled to begin in November and be completed by the end of January 2025,” the document notes.
Regarding state banks, the procedure for assessing the efficiency of all state banks is expected to be implemented in 2025, with the first such efficiency assessment to be conducted by the Ministry of Finance for each bank at the end of July 2025.
"In December 2025, the Ministry of Finance will publish the main findings of its first annual assessment along with proposed actions for the Cabinet of Ministers," the document states.
Furthermore, by the end of December 2024, the structure for establishing and paying remuneration to top management of all state banks should be revised in consultation with international financial institutions based on principles that ensure remuneration is competitive internationally, consistent, proportional to the functions, duties, and responsibilities of the leaders, and takes into account part-time work and military restrictions.
The memorandum of economic and financial policy also includes an updated commitment from Ukraine to appoint an internationally recognized financial consultant for the privatization of Sens Bank and Ukrgasbank (both located in Kyiv) by the end of December 2024, using a transparent process and consulting with international financial organizations.
The current supervisory board of Sens Bank, consisting of five members and headed by former EBRD representative in Ukraine, Shevki Adjuneri, was formed during its nationalization in July 2023. It includes three independent members, while according to the law on banks and banking activities, the supervisory board of a state bank consists of nine members, six of whom are independent, and three represent the president, the Cabinet, and the Verkhovna Rada.
On October 4, 2024, the government selected a recruiter for the selection of candidates for the supervisory board of Sens Bank - LLC "Executive Search Ukraine" from the international network Amrop, following a competitive process.
As previously reported, Ukraine committed in the updated June 4th review of the EFF program to appoint an international consultant for the sale of Ukrgasbank and Sens Bank by the end of September; however, the fulfillment of this condition has been postponed to a later date.
In early September, Prime Minister Denys Shmyhal stated that the government is currently not considering the privatization of state-owned Oschadbank and Ukreximbank, which are the second and third largest banks in the country by assets. There is no strategy for their sale, while privatization is planned for Ukrgasbank and Sens Bank, which rank fifth and eighth, respectively, but the timeline for this remains uncertain.
Additionally, on September 19, the Verkhovna Rada passed a bill on the specifics of selling state-owned shares in the charter capital of banks (No. 3939-IX), which was sent for the president's signature on September 25. Thus, another point of the IMF program was timely fulfilled.
The largest state bank in the country is PrivatBank, which was nationalized at the end of 2016. Following the onset of full-scale war, in addition to Sens Bank, two more small banks were transferred to state ownership from sanctioned owners by the decision of the High Anti-Corruption Court: the First Investment Bank (PINbank) owned by Russian businessman Yevgeny Giner and Motor-Bank, previously owned by former Motor Sich president Vyacheslav Boguslaev. By asset size, they rank 59th and 56th among the 62 banks operating in Ukraine. Unlike the five large banks mentioned above, which are managed by the Ministry of Finance, they have been transferred to the management of the State Property Fund for sale. A specialized postal bank is also planned to be established based on PINbank.
As a result, the total number of state-controlled banks has reached seven. Their share of the total assets as of August 1, 2024, was 55.8%, despite previously declared plans to reduce it below 25%.