Ukraine

Ukraine is investigating whether a charitable foundation set up primarily to coordinate London-listed Ferrexpo Plc’s philanthropic activities was used to launder money and evade taxes, Bloomberg News reported. Officials of Blooming Land Charitable Foundation abused their powers to seek “illicit benefits,” damaging state interests, a Ukraine prosecutor said in a court filing in Kiev in February. Blooming Land may have received payments from businesses, “legalizing the proceeds via converting them into cash under the guise of donations for charity,” other court documents allege.

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The Deposit Guarantee Fund of Ukraine last week sold insolvent banks' assets worth UAH 80.26 million, the fund's press service reports. “Last week the assets of 25 banks, which are in the management of the Fund, were sold for UAH 80.26 million,” the report says. In particular, UAH 50.56 million was received from the repayment of fund creditors' claims, UAH 26.08 million from the sale of main banks' assets, and UAH 3.14 million from the sale of accounts receivable. Also, UAH 0.15 million was obtained from the direct sale of banks’ property.

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Ukrainian tycoon Ihor Kolomoisky won a major victory on Thursday in his battle with the government over the nationalization of the country’s largest bank as a court ruled the change of ownership was illegal, Reuters reported. The ruling is a big setback for the government, which wrested PrivatBank from Kolomoisky, a co-founder of the bank, in December 2016. PrivatBank was nationalized as part of a clean-up of the banking system backed by the International Monetary Fund, which supports Ukraine with a $3.9 billion loan program.

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The Deposit Guarantee Fund has temporary suspended payments to depositors of insolvent JSC Zlatobank, the Fund's press service reports, MENAFN reported. "The Grand Chamber of the Supreme Court under the ruling as of February 5, 2019 denied motions submitted by the Deposit Guarantee Fund and National Bank of Ukraine against the decision of Kyiv Administrative Court of Appeal, dated October 25, 2017, canceling liquidation of JSC Zlatobank, the statement says. Read more

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The International Monetary Fund approved a new $3.9 billion bailout program for Ukraine to help stabilize the economy and help the government pay back its debts, according to President Petro Poroshenko, Bloomberg News reported. The board of the Washington-based lender agreed on Tuesday to provide the eastern European country with the first $1.4 billion disbursement. It’s part of the stand-by program which replaces a bailout that suffered long delays as the government failed to implement the reforms necessary to release the cash.

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Ukraine’s central bank declared insolvent Kremlin-run lender VTB’s local subsidiary on Tuesday, ending a long-running struggle over the Russian state’s role in the country after the annexation of Crimea, the Financial Times reported. The National Bank of Ukraine said it would wind down VTB Ukraine’s operations after its Moscow parent “failed to comply with banking law and the [NBU’s] regulations” and “made no attempt to keep the bank solvent”.

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A deepening row between Russia and Ukraine ignited by a naval skirmish at the weekend has sparked falls in both countries’ financial markets, the Financial Times reported. Ukraine’s government bonds issued in foreign currency faced significant drops in price, which sent yields rising. Yield on a 10-year dollar-denominated bond maturing in November 2028 jumped 38.7 basis points to 10.832 per cent, its highest level since issuance. A 15-year dollar bond that matures in September 2032 faced a similar rise in yield to 10.385 per cent, also a record high for the paper.

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The International Monetary Fund on Friday announced it had reached preliminary agreement on a new $3.9bn assistance package for Ukraine, whose government hours earlier took the politically unpopular decision of meeting a key condition of the fund by raising household gas tariffs by 23.5 per cent, the Financial Times reported. The new 14-month programme has yet to be approved by the IMF’s executive board.

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Ukraine posted its tenth successive quarter of growth earlier this year with a 3.6 per cent year-on-year increase in GDP in the period April to June. Although still well below its real potential growth rate, this is progress for a country that stood on the brink of financial collapse four years ago, the Financial Times reported in a commentary. It also represents a qualified success for western policy, which eschewed a military role in the conflict with Russia in favour of measures designed to shore up Ukraine’s economic sovereignty.
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While the war in Ukraine’s east continues to rage four years on, the battle between Russia and Ukraine is returning to the calm and order of a London courtroom. There, British judges, unwilling to play diplomat, are this week set to rule on an appeal by Ukraine that it must repay part of a $3 billion bond in default, Bloomberg News reported. The Court of Appeal will rule on the case after Russia won an early verdict last spring in a lower court. The dispute “has multiple venues, and courtrooms are one of them," said Orysia Lutsevych, a research fellow at the Chatham House thinktank in London.
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