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The logo of the Ukrainian state-owned Oschadbank is seen at one of its branches in Lviv on Nov. 3, 2021. (Photo: Mykola Tys/SOPA Images/LightRocket via Getty Images)
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Editor’s Note: This is issue 96 of Ukrainian State-Owned Enterprises Weekly, covering events from July 1-7, 2023. The Kyiv Independent is reposting it with permission.

Ukrainian SOE Weekly is an independent weekly digest based on a compilation of the most important news related to state-owned enterprises (SOEs) and state-owned banks in Ukraine. This publication was produced with the financial support of the European Union within the project “Supporting Ukraine in rebuilding and recovery” implemented by the KSE Institute. The contents of this publication are the sole responsibility of the editorial team of the Ukrainian SOE Weekly and do not necessarily reflect the views of the European Union.


Fitch affirms most of the credit ratings of Ukrainian state-owned banks. On June 30, Fitch Ratings updated the sustainability ratings of four Ukrainian state-owned banks: Oschadbank, Ukrgasbank, PrivatBank, and Ukreximbank.

Here are the key updates from Fitch:


Viability Rating (VR)

Long-Term Foreign-Currency Issuer Default Rating (LTFC IDR)

Long-Term Local-Currency Issuer Default Rating (LTLC IDR)

Government Support Rating (GSR)


affirmed at ‘ccc-’

affirmed at ‘CCC-’

affirmed at ‘CCC’

downgraded to ‘no support’ (ns) from ‘ccc-’


upgraded from ‘cc’ to ‘ccc-’

affirmed at ‘CCC-’

affirmed at ‘CCC’

downgraded to ‘no support’ (ns) from ‘ccc-’


upgraded from ‘cc’ to ‘ccc-’

affirmed at ‘CCC-’

affirmed at ‘CCC’

downgraded to ‘no support’ (ns) from ‘ccc-’


affirmed at ‘f’

affirmed at ‘CCC-’

affirmed at ‘CCC’

affirmed at ‘no support’ (ns)

Three of the four banks now have a Viability Rating (VR) at ‘ccc-,’ with Ukreximbank having a lower VR at ‘f.’

The Long-Term Foreign-Currency Issuer Default Rating (LTFC IDR) and the Long-Term Local-Currency Issuer Default Rating (LTLC IDR) are the same across the four banks, at ‘CCC-’ and ‘CCC’, respectively.

The Government Support Rating (GSR) is now also the same for all the four banks – ‘no support’ (ns) – with PrivatBank, Oschadbank, and Ukrgasbank’s GSRs downgraded from ‘ccc-’ and Ukreximbank’s GSR affirmed.

According to Fitch, the downgrade of PrivatBank’s GSR reflects its belief that in the event of a material capital shortfall, PrivatBank would likely operate under regulatory capital forbearance in the near term, rather than receive prompt extraordinary capital support from the sovereign.

Ukreximbank’s LTFC IDR of ‘CCC-’ reflects Fitch’s view that the risk of default on the bank’s senior foreign-currency third-party non-government creditors remains a real possibility due to the war.

Fitch expects that the bank would continue to service its obligations in the near term, reflecting its generally adequate foreign-currency liquidity relative to its needs, supported by various regulatory capital and exchange controls in place since the outbreak of the war to reduce the risks of deposit and capital outflows and maintain stability and confidence in the banking system.

The upgrade of Ukrgasbank’s VR reflects Fitch’s view of the bank’s moderately lower risk of failure, as it is more profitable and has more resilient asset quality because it operates in a less severe environment than Fitch previously expected.

Nonetheless, Fitch believes that failure remains a real possibility. The downgrade of the GSR reflects its belief that in the event of a material capital shortfall, Ukrgasbank would likely operate under regulatory capital forbearance in the near term, rather than receive prompt extraordinary capital support from the sovereign.

The same forecasts were made for Oschadbank’s (as for Ukrgasbank’s) LTFC IDR, LTLC IDR, and GSR.

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The NBU warns of risks posed by a high share of state capital in the banking sector. In its Financial Stability Report for June 2023, the National Bank of Ukraine (NBU) reported an increase in the predominance of state-owned banks on all key indicators of the banking system.

According to the NBU, such growth is justified in a period of deep crisis caused by the full-scale war. However, this poses great risks for the competitive environment in the banking sector during any subsequent recovery period.

The central bank noted that the war has once again postponed the plans to privatize Ukrainian state-owned banks. According to the NBU, the strategies of state-owned banks need to be updated to address key shortcomings in their operations and prepare most of them for privatization after hostilities end.

The regulator also reported that the share of household deposits in all state-owned banks was over 60%.

The NBU drew attention to lending by state-owned banks to SOEs. Such lending makes up almost a third of the net corporate portfolio of state-owned banks. This is three times as high as the share of loans to SOEs in the corporate portfolio across the entire banking sector, suggesting that the share of loans to SOEs in the banking sector is around 10-11%.

Currently, only state-owned banks are prepared to provide sufficiently large loans to SOEs, given how much state-owned companies need due to the government’s priorities, the NBU claimed.

The central bank stated that the strategic areas of activity of state-owned banks during martial law and post-war economic recovery should be supplemented by more specific objectives in the short term. Based on these goals, the newly elected supervisory boards of state-owned banks should approve full-fledged strategies that will define the role and tasks of each bank in the context of a prolonged war, the NBU said.

The NBU added that the “nationalization of a bank whose shareholders are under sanctions related to the Russian aggression” (this applies to the last major Russia-linked bank in Ukraine, Sense Bank, which had operated under the name Alfa-Bank until 1 December 2022)  may be a new challenge (because it will lead to an even higher share of the state in the banking sector and, accordingly, a higher volume of non-performing loans (NPLs) in state-owned banks).

In SOE Weekly’s Issue 91, we reported that the share of non-performing loans (NPLs) in state-owned banks has grown to 53% as of May 1.

In Issue 94, we reported that the law allowing the nationalization of Sense Bank came into force. See more about the process of nationalization in Issue 94.

How nationalist movements paved Ukraine’s way to freedom
When Russia launched its full-scale invasion of Ukraine, many in the West, and in the Kremlin too, expected the Ukrainian state to crumble in weeks, if not days. The government would flee, the state would be carved up – some lands absorbed by Russia, the rest perhaps being made into a

Ukrposhta wants to take over the PINBank of sanctioned Russian oligarch Giner and turn it into a postal bank. According to Ekonomichna Pravda (EP), Ukrposhta aims to take over PINBank which was confiscated from Russian oligarch Yevgenii Giner.

According to the EP, Ukrposhta’s CEO Igor Smelyansky refused to talk about the possible transfer of the bank’s shares to his company, but noted that “there is progress in this matter”.

Currently, Ukrposhta offers various financial services, such as paying out pensions, making money transfers, and acquiring bank cards. However, it is limited to conducting transactions in cash or processing cards from other banks. To open accounts for its clients, Ukrposhta requires a banking license.

Note also that Ukrposhta is the sole financial service provider with complete geographic coverage of Ukraine, while bank branches are primarily concentrated in urban areas. This makes Ukrposhta an ideal candidate for ensuring financial inclusion of Ukraine’s population by offering financial services to individuals who may not have access to them otherwise.

This proposal was also put forth by Andriy Boytsun and Dmytro Yablonovskyi, two members of the SOE Weekly team, in their 2017 policy paper titled “What should the state do with its banks?

The importance of ensuring financial inclusion has become even more significant during the full-scale Russian aggression, as Ukrposhta often remains the only company capable of providing services close to combat zones. Additionally, Ukrposhta has taken on new public service obligations in wartime, including the disbursement of financial aid to internally displaced persons.

The EP also wrote that there was still no consensus among the authorities on the establishment of a postal bank. According to EP’s sources, this idea is strongly supported by Smelyansky and Deputy Head of the President’s Office Rostyslav Shurma. Minister of Economy Yulia Svyrydenko is also in favour of this decision.

At the same time, the Ministry of Infrastructure, which regulates Ukrposhta, has not yet dared to propose its own plan to transfer the Russian bank to the postal operator. According to the EP’s sources in the Ministry of Infrastructure, Smelyansky’s idea is generally supported, but the Ministry wants to avoid conflicts with the Ministry of Finance, the NBU, and international partners.

The EP’s sources in the Ministry of Finance criticized this idea, saying it would violate Ukraine’s commitments to international donors, including the IMF and the World Bank.

The NBU agreed that a postal bank would violate Ukraine’s commitments to the IMF. The Fund is concerned about the large share of the state in the banking market. For this reason, the authorities have pledged to co-ordinate each new nationalization with the IMF, the media said.

The EP also said that PINBank is one of the smallest banks in Ukraine. As of May 1, its net assets stood at Hr 990.6 million ($27 million), ranking the bank 56th (by net assets) among 65 Ukrainian banks. The vast majority of these assets are government bonds: Giner’s bank holds Hr 602 million ($16.5 million) in such bonds.

The EP added that this is not Ukrposhta’s first attempt to launch a postal bank. The Verkhovna Rada passed the first reading of a draft law to establish a bank piggybacking off the postal operator in May 2020, but this was opposed by the IMF and the NBU.

The second attempt was Ukrposhta’s purchase of Alpari Bank, Ukraine’s smallest bank in terms of assets. The AMCU cleared the deal in June 2022. However, the NBU again opposed the deal, which was eventually abandoned, the EP wrote.

See more about Ukrposhta's attempts to buy Alpari Bank in our Issue 58.


Ukrnafta CEO interviewed. Ukrnafta’s CEO Sergii Koretskyi was interviewed this week by Ekonomichna Pravda (EP). We selected the key points:

On debts and financial situation:

  • “There was a huge number of problems, we had money only for salaries. There was nothing to pay taxes, rent, or income tax for the previous period before my appointment. There was a huge receivable of Hr 30 billion ($820 million).”
  • “The problems faced by the new management amount to approximately Hr 100 billion ($2.7 billion).”
  • “In the first half of the year, the company will earn about Hr 12 billion ($328 million) in net profit. This means that we have already fulfilled our annual plan in the first half of the year. The total amount of taxes and duties paid in the first half of the year is about Hr 15 billion ($410 million).”

In SOE Weekly’s Issue 90, we reported that Ukrnafta’s financial plan for 2023, approved by the Cabinet of Ministers, expects Hr 74 billion ($2 billion) in net income from operations, Hr 12 billion ($328 million) in net profit, and Hr 25 billion ($684 million) in tax payments to the state.

As we also reported in Issue 90, Koretskyi said earlier that Ukrnafta earned about Hr 7 billion ($191 million) in net profit in January-April 2023. This figure is most likely unaudited. We have not been able to identify any official reporting on profits. We have also not been able to find Ukrnafta’s financial statements for 2022.

OCCRP: Ukrainian grain exported through tax-avoiding ‘shell firms,’ robbing country of wartime revenue
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On plans:

  • “The company produces 1.45 million tonnes of oil per year, but we plan to increase this figure to 3 million. The same goes for gas. We currently produce 1 billion cubic metres, and we plan to produce 2 billion cubic metres. This is a five-year perspective.”
  • “All problems can be solved. The company has huge potential. In five to 10 years, it could become the second Orlen… I believe that (this requires) about $2.5 billion over five years.”

PKN Orlen is a Polish multinational oil refiner and petrol retailer. According to the 14th annual Coface CEE Top 500 ranking, Orlen is the largest company in Central and Eastern Europe, measured by turnover and net profit.

In Issue 68, we reported that the shares of Ukrnafta, Ukrtatnafta, Motor Sich, AvtoKrAZ, and Zaporizhzhiatransformator (ZTR) were seized “for the needs of the state” and transferred to the Ministry of Defense on Nov. 6, 2022.

The seizures were made under the Law on the Transfer, Forced Alienation, or Seizure of Property under Martial Law or State of Emergency, which obliges the state to eventually return the seized assets to the owners or give them fair compensation.

Naftogaz owns 50% + 1 share of Ukrnafta. These shares were not seized. A group of companies informally known as the Privat group, associated with businessmen Ihor Kolomoisky and Hennadiy Boholyubov, owned about 42% of the shares.

The remaining shares were held by some 11,000 dispersed shareholders, including the company’s former or current employees, investment funds, and pension funds. All these shares were seized by the state along with those of the Privat group.

After the seizure, the state replaced the supervisory boards and executive management at most of these companies. On  Nov. 7, 2022, the Ministry of Defense, as Ukrnafta’s new shareholder, appointed a new supervisory board for the company.

Former CEO of the WOG chain of petrol stations, Sergii Koretskyi, became the CEO of both Ukrnafta and Ukrtatnafta on Nov. 8 and 10, respectively.


The SPFU reports privatization results for the first half of 2023. On July 4, the State Property Fund of Ukraine (SPFU) reported that it had raised Hr 1.82 billion ($50 million) from privatization auctions to the budget in the first half of 2023.

The revenue from privatization to the state budget is projected to be Hr 6 billion ($164 million) in 2023.

According to the SPFU, a total of 210 auctions were held with 1,012 participants. The total sum of the winning prices for all auctions was 3.5 times as high as the total sum of the starting prices.

The SPFU said that the most successful auctions in the first half of the year included the Hermitage Hotel (Hr 311 million, or $8.5 million), Ukroboronresursy (Hr 210 million, or $5.7 million), Ust-Dunaisk port (Hr 201 million, or $5.5 million), Storonybabsky distillery (Hr 142 million, or $3.9 million), and Elektronmash (Hr 120.8 million, or $3.3 million). See more in Issue 90.

In SOE Weekly (Issue 85), we reported that the state budget received Hr 902 million ($24.7 million) from privatization in the first quarter of 2023.

SPFU sells RivneTorf for Hr 205 million. On July 5, the SPFU sold peat briquette plant RivneTorf for Hr 205 million ($5.6 million), a more than fourfold increase from the starting price (Hr 47.1 million). There were 12 bidders in the auction.

According to the auction results protocol, the winner is Land Grow LLC. YouControl shows that the beneficiary of this company is a man named Oleksiy Khalimon.

The winner of the auction has 20 working days to pay the lot price. In addition to the winning bid, it must pay VAT of Hr 41 million ($1.1 million). If the winner should not pay on time, it will lose Hr 9.4 million ($257,000) of its guarantee deposit, the SPFU said.

According to YouControl, RivneTorf owns two real estate objects, 13 land plots (with an area of 248 hectares) in Rivne Oblast, and 44 transport vehicles.

This Week in Ukraine Ep. 15 – Why culture matters during war
Episode #15 of our weekly video podcast “This Week in Ukraine” is dedicated to Ukrainian culture, the important role it plays in war, and why it has been a target of Russian dictators for decades. Host Anastasiia Lapatina is joined by the Kyiv Independent’s culture reporter Kate Tsurkan. Listen to

Ust-Dunaisk port not yet handed over to the privatization auction winner. On June 30, Elixir Ukraine, the winning company in the privatization auction for the Ust-Dunaisk trade port, said that it has not yet received the asset that it acquired. The SPFU will not sign the port over due to an open criminal case (concerning an illegal construction on the port’s site).

According to Elixir Ukraine’s lawyer, the company paid the full amount of Hr 201 million ($5.5 million) to the state budget for the port in April. “The investor is ready to take over the facility, invest and develop the cargo flow, and develop Danube shipping in the face of the fact that the grain corridor is currently not working. But there is an obstacle – a criminal case was immediately initiated for obvious reasons”, the lawyer said. Representatives of the company declined to comment further.

The lawyer did not name the “obvious reasons.” His comment may suggest that the criminal case is an artificial one, and it has been made up to pressure the company with the aim of extorting illegal benefits.

According to registries, the SPFU remains the owner of the Ust-Dunaisk port. One court ruling was made against the port in a single criminal case cited above. However, according to registers, Elixir Ukraine is not involved in the case.

The main problem is that the acceptance certificate for the facility has not yet been signed, and “accordingly, the investor is unable to commission the facility and start operating with the funds”, the company said.

According to Elixir Ukraine’s representative, the SPFU’s regional office will also not sign off on the purchase without consent of the Anti-Monopoly Committee of Ukraine (AMCU). The company believes that in this case, such consent is not required by law, but admits that “officials want to be safe and demand such consent.”

The SPFU confirmed that the process of transferring the port from the state to the new owner is still ongoing, and the investor is currently awaiting the AMCU’s permit.

According to the acting CEO of the port, Oleksandr Popov, there is yet another bottleneck – 6% of the port’s assets have been allegedly appropriated by “local murky [crime] lords” in an illegal manner. These assets must yet be returned into the port’s ownership, and this issue should also be resolved soon.

In SOE Weekly (Issue 71), we reported that on Jan. 17, the SPFU sold the Ust-Dunaisk trade seaport for Hr 201 million, a more than threefold increase from the starting price (Hr 60 million). This was the first sale of a seaport in the history of independent Ukraine.

In Issue 85, we reported that the SPFU announced the signing of a sale and purchase agreement for the port with the winner of the auction, Elixir Ukraine LLC.

According to the SPFU, Elixir Ukraine, an official representative of the Serbian company Elixir Zorka trading in complex mineral fertilisers, aims to increase transshipment volumes.

Confiscation of the aggressor state’s assets, nationalization, and asset seizure

The SPFU establishes a new unit to manage confiscated assets. On July 3, the SPFU announced that it is establishing a new department for the support of its work with sanctioned property.

The newly created unit would manage the seized assets of the Russian Federation and its residents, organize joint work with the High Anti-Corruption Court (HACC), the Ministry of Justice, the National Security and Defense Council (NSDC), and law enforcement agencies to recover such assets and prepare them for lease or privatization, the SPFU explained.

The SPFU has announced a competitive selection of the director of the new department.

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AMCU approves the transfer of Ukrnaftoburinnya to Ukrnafta. On July 5, Ukrnafta reported that the Anti-Monopoly Committee of Ukraine (AMCU) allowed Ukrnafta to manage the corporate rights of four companies: PrJSC Ukrnaftoburinnya, East Europe Petroleum LLC, Sakhalinske LLC, and Sirius-1 LLC.

The AMCU’s approval follows changes in the law on improving state property management and increasing the effectiveness of the sanctions policy.

According to ExPro Consulting, the AMCU did not support the Cabinet of Ministers’ draft resolution on the transfer of Ukrnaftoburinnya’s assets to Ukrnafta in May 2023. The AMCU said that this transfer would be recognized as a concentration requiring merger clearance.

In May 2023, UNIAN (a news agency allegedly owned by businessmen Ihor Kolomoisky), reported that the Ministry of Finance also did not approve the transfer of Ukrnaftoburinnya’s assets to Ukrnafta’s management as initiated by the Cabinet of Ministers.

After that, the above law was changed. According to these changes, during martial law, the acquisition of control of 50% or more of the shares in the authorized capital of which are owned by the state, would be considered a concentration, unless the purpose of acquiring control is to prevent the occurrence or eliminate the consequences of emergencies or disruptions in heat, energy, electricity, water supply, sewerage, or natural gas supply (in which case, the acquisition of control is not considered as a concentration.) Concentration may require prior approval of the AMCU.

Ukrnafta said that PrJSC Ukrnaftoburinnya, East Europe Petroleum LLC, Sakhalinske LLC, and Sirius-1 LLC produce oil and gas in the Sakhalin hydrocarbon field. Their assets were seized in a recent criminal case brought against Ukrnaftoburinnya.

According to the registry, Ukrnaftoburinnya’s ownership is split between Ares Systems Ltd (22.49%), Deripon Commercial Ltd (22.49%), JKX Ukraine B.V. (10%), and Ariana Business Limited (22.49%). The media reported that the company is associated with businessmen Ihor Kolomoisky, Pavlo Fuks, and Vitaliy Khomutynnik.

Ukrnaftoburinnya is one of the largest private gas producers in Ukraine, extracting 725.4 million cubic metres in 2021. According to Ekonomichna Pravda (EP), its 2021 net profit was Hr 5.65 billion ($154 million). In 2022, this fell to Hr 3.77 billion ($103 million).

Ukrnaftoburinnya’s press service argued that “Ukraine [was] de facto legalizing the illegal [confiscation] of private assets and creating a legislative framework that contradicts the legal norms already adopted.”

It also said that the AMCU made the above decision without consulting the company, and its position was not taken into account. “We consider the decision to have been made under administrative pressure with a gross violation of the law,” Ukrnaftoburinnya’s press service added.

According to Ukrnaftoburinnya, the company’s shareholders will challenge the decision in international courts, including the European Court of Human Rights.

In SOE Weekly (Issue 84), we reported that the Asset Recovery and Management Agency (ARMA) received all shares of Ukrnaftoburinnya after the asset was seized on April 7. The shares were seized in connection with a criminal investigation into the development of Ukraine’s largest explored gas field, the Sakhalin, in Kharkiv Oblast. See more about this case in Issue 84.

In Issue 86, we reported that on April 27, Ukrnafta’s CEO Sergii Koretskyi asked the Ministry of Economy to hand the corporate rights of Ukrnaftoburinnya to Ukrnafta.

In Issue 90, we reported that on May 23, the Cabinet of Ministers approved the proposal of ARMA and the Ministry of Defense to transfer the corporate rights of Ukrnaftoburinnya to Ukrnafta.

As we reported in Issue 92, Ukrnafta said on June 14 that it had signed agreements to manage Ukrnaftoburinnya assets on ARMA’s behalf. Ukrnafta stated that it would start managing the assets after receiving a merger clearance from the AMCU.

How nationalist movements paved Ukraine’s way to freedom
When Russia launched its full-scale invasion of Ukraine, many in the West, and in the Kremlin too, expected the Ukrainian state to crumble in weeks, if not days. The government would flee, the state would be carved up – some lands absorbed by Russia, the rest perhaps being made into a
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