Ukraine is set to nationalize a bank controlled by two Russian businessmen, denying them a financial haven and seeking to curb their influence on Kyiv’s economy and politics.
Ukraine is set to nationalize a bank controlled by two Russian businessmen, denying them a financial haven and seeking to curb their influence on Kyiv’s economy and politics.
Sense Bank, formerly known as Alfa Bank-Ukraine, is controlled by Mikhail Fridman and Petr Aven, two Russian businessmen under European Union and United Kingdom sanctions over their alleged ties to the Kremlin, which they have denied.
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Sense Bank, formerly known as Alfa Bank-Ukraine, is controlled by Mikhail Fridman and Petr Aven, two Russian businessmen under European Union and United Kingdom sanctions over their alleged ties to the Kremlin, which they have denied.
Nearly a year and a half after Russia’s invasion, Ukraine is tackling a prominent and longstanding symbol of Moscow’s involvement in the country’s financial and political life as it struggles to right its institutions while defending itself on the front line. The bank aggressively expanded its holdings in Ukraine over the years and used that leverage to stifle criticism of Russia, according to people who have dealt with the bank.
Last month Ukraine passed a law mandating the nationalization of banks whose owners have been sanctioned in connection to Russia’s military effort. Meanwhile, since the invasion last year, Ukraine’s Western allies have seized yachts, real estate and other overseas assets of wealthy Russian businessmen, hoping they will exert pressure on Russian President Vladimir Putin to change course in Ukraine.
On Thursday, the National Bank of Ukraine said it had withdrawn Sense Bank from the market and proposed nationalizing it, citing its “support for actions and policies” that threaten Ukraine’s territorial integrity, sovereignty and independence. Ukraine’s ministerial cabinet is expected to endorse the petition.
Sense Bank confirmed the move in a statement, saying that once the cabinet makes its decision, an interim administrator will assign a new management group for the bank.
Andriy Pyshnyy, governor of the National Bank of Ukraine, said the seizure was a practical step given the sanctions against Aven and Fridman.
“Such sanctions make them unreliable shareholders and block their ability to support the bank,” Pyshnyy told The Wall Street Journal.
Since soon after Russia’s invasion of Ukraine last year, Fridman’s assets have been frozen in the U.K. Companies and investors have been severing ties with him to avoid being sanctioned themselves.
Fridman and Aven didn’t respond to requests for comment.
“Russia has been trying to subdue Ukraine economically for many years,” said Anton Shvets, a Ukrainian anticorruption activist and former politician who has written extensively about Fridman and the bank. “Alfa Bank was quite a powerful tool of influence. Ukraine with this case shows solidarity with Western countries that impose sanctions against Russian oligarchs.”
The National Bank of Ukraine said that Sense Bank’s regulatory capital had dropped significantly since the invasion while that for other major banks had risen, a disparity it attributed to declining confidence in the bank and a drop in payments by its borrowers.
Nationalization “was aligned with the best interests of depositors and financial stability of the market overall,” said Dmytro Oliinyk, the National Bank’s deputy governor.
Ukraine is targeting two other banks it says have ties to Russia.
A Ukrainian court has approved the seizure of PIN Bank, which is owned by Evgeny Giner, a Russian citizen and president of Moscow’s CSKA soccer club. A court is considering a state petition to take control of Motor Bank, which is owned by Vyacheslav Boguslayev, the president and main shareholder of the aviation company Motor Sich, a Ukrainian defense manufacturer. The Ukrainian Security Service arrested Boguslayev in October on charges of supplying aircraft engines to the Russian military through third countries. Boguslayev denied the charges.
Fridman and Aven have been fighting the EU and U.K. sanctions imposed on them over alleged Kremlin ties and have previously pursued plans to transfer portions of their wealth into Alfa Bank-Ukraine, now Sense Bank, in exchange for sanctions relief.
Last year Fridman offered to transfer $1 billion of his personal wealth into the bank, a proposal that people familiar with the issue said was intended to persuade the U.K. to lift sanctions against him.
Fridman’s proposal was among a number of overtures that blacklisted business executives, banks and companies have quietly been making to Western authorities as those nations prosecute a campaign to cripple Russia economically in response to its war in Ukraine, according to U.S. officials.
Roman Shpek, Sense Bank’s supervisory board chairman, said at the time that the money would be used to finance critical projects in Ukraine. Fridman denied having made a quid pro quo offer.
