PrivatBank's credit risk grew by UAH 29.65 bn 2.5 months before nationalization - Ernst & Young

PrivatBank's credit risk grew by UAH 29.65 bn 2.5 months before nationalization - Ernst & YoungPrivatBank's credit risk from September 30 to December 19, 2016, when the bank's nationalization was under way, grew by UAH 29.65 billion from UAH 192.63 billion to UAH 222.28 billion, according to a preliminary analysis by Ernst & Young (EY) on the bank's demand for capital.

This is reported by Interfax-Ukraine.

In keeping with the analysis, the bank originally submitted its rough estimates of the credit risk to the NBU by September 30, calculating it in keeping with new norms under resolution No. 351 dated June 30, 2016, having estimated the risk at UAH 169.2 billion.

However, following the analysis of the bank's performance conducted by EY in October-November 2016, the assessment of the credit risk as of September 30, 2016, rose by UAH 23.4 billion, to UAH 192.63 billion.

Analyzing causes behind such the UAH 29.65 billion increase, EY mentioned that prior to the operation of the nationalization on December 16, the bank had handled a number of transactions that resulted in swapping debts of LDC Suisse, Cargill Financial Services Int, JP Morgan and Commerzbank for debts of Claresholm Marketing Ltd (the British Virgin Islands).

"There was no default risk before the debt swap. The credit risk after the swap is determined by EY and the bank at the level of 100%," the analysis said. These transactions boosted the credit risk by UAH 11.93 billion.

The audit firm claims that the transactions have some suspicious features and should be analyzed as part of the forensic audit.
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