Business news from Ukraine

OFFICE ABSORPTION IN KIEV GROWS BY 70% – COLLIERS

The total absorption in the high-quality office real estate market in Kyiv in July-September 2019 increased by more than 70% compared to the same period in 2018 and amounted to near 46,000 square meters, according to a press release of Colliers International (Ukraine), the international consulting company.
“In general, during the first nine months of 2019, the volume of transactions amounted to about 131,000 square meters, which already exceeds the results of entire 2018. According to the results of the third quarter, IT industry companies (48%) had the main share of the total absorption, as well as companies from industry and energy (33%),” Colliers said.
According to the company, new offer in the third quarter amounted to 10,000 square meters, or some 15% of the declared for commissioning in the second half of 2019.
According to Colliers, developers announced five facilities with a total area of about 57,000 square meters for going live by the end of 2019.
“A significant part of the office space under construction already has signed preliminary lease agreements. This trend is one of the indicators of increased demand and the formation of the landlord market. Given the shortage of high-quality office space, the vacant space of facilities with a good location and concept is quickly absorbed by the market,” Colliers said.
According to company analysts, rental rates in Kyiv offices in the third quarter remained at the level of the previous quarter. In particular, the range of base rental rates in Class A business centers amounted to $22-30 per square meter, in the class B centers it is $14-21, and in the class C centers it is $9-13.
Modest growth is projected during the first half of 2020.

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KIEV-BASED STATE BANK UKREXIMBANK ANNOUNCES COMPETITION FOR POSITION OF BOARD CHAIRMAN

The supervisory board of Kyiv-based state bank Ukreximbank has announced a competition to select a candidate for the position of board chairman and hired international recruitment company Odgers Berndtson, the Finance Ministry of Ukraine reported on its website.
According to the statement, the supervisory board approved this decision on November 15. Applications from candidates will be accepted from November 18 until December 2, 2019. On December 3, the bank’s nomination and remuneration committee in cooperation with Odgers Berndtson will form a list of not more than 10 candidates admitted to the next stage of the competition. On December 4-6, interview with the candidates will be held after which three candidates will be admitted to the final stage of the competition.
On December 6, the final stage of the competition will be held.
A candidate for the position must have at least five years of experience in the financial sector in total, including at least three years on senior managerial positions as well as have impeccable business reputation.
As reported, on November 16, 2019, the Security Service of Ukraine acting in charge of the Prosecutor General’s Office of Ukraine (PGO) detained Board Chairman of Ukreximbank Oleksandr Hrytsenko in the framework of a criminal proceeding on the grounds of committing crimes under Part 1 of Article 255 (creation of a criminal organization), Part 5 of Article 191 (misappropriation, embezzlement of property or possession by abuse of office), Part 3 of Article 209 (legalization (laundering) of proceeds of crime).
Pechersky District Court of Kyiv chose a measure of restraint to Hrytsenko in the form of a UAH 3 million bail without keeping in custody.
According to the PGO, Hrytsenko is under investigation into case No. 12013220540000400 dated January 31, 2013, for being a part of a criminal organization, created by former President of Ukraine Viktor Yanukovych and his companions in February 2010, and is charged with assistance in lifting seizures from deposits and collateral for a $160 million loan for the purchase of the Ukrainian Media Holding.
Hrytsenko was appointed as Board Chairman of Ukreximbank in August 2014.
Ukreximbank, the sole owner of which is the state, was created in 1992. According to the National Bank of Ukraine, as of October 1, 2019, in terms of total assets (UAH 205.439 billion), the bank was third among 76 banks operating in the country.

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SON OF FORMER U.S. VICE PRESIDENT BIDEN RECEIVES $16.5 MLN IN PAYMENTS STOLEN FROM UKRAINE – UKRAINIAN MP

Some $16.5 million received by Hunter Biden, the son of former U.S. Vice President Joe Biden, as payment from Burisma was stolen from Ukrainian citizens, member of parliament Andriy Derkach has said. Derkach said at a press conference at the Kyiv-based Interfax-Ukraine news agency that on November 14 the Prosecutor General’s Office (PGO) announced a new suspicion to the owner of Burisma, former Ecology Minister Mykola Zlochevsky.
“The PGO document once again confirms the data I had previously published on Burisma and international corruption. According to Zlochevsky’s suspicion notice, Biden and partners received their $16.5 million for their services to Burisma. Biden received funds not due to the successful activity of Burisma or for brilliant business decisions or recommendations. This is the money of Ukrainian citizens. The funds were obtained by criminal means. That’s what they say in the PGO,” Derkach said.
Derkach said the new suspicion notice to Zlochevsky was received by him from investigative journalists.
“According to the investigation, Zlochevsky was directly involved in the withdrawal of funds by the Yanukovych “family” (the Yanukovych criminal organization, according to the notice). They laundered the funds of Yanukovych through three companies in Latvia,” Derkach said.
As reported, on October 9 Derkach made public official correspondence between the National Anti-corruption Bureau of Ukraine (NABU) and the U.S. Embassy, according to which First Deputy NABU Director Gizo Uglava through his assistant Polina Chizh provided the U.S. Embassy with information that affected the course of events in Ukraine and the United States.
According to him, Chizh received an order from U.S. Embassy employee Hanna Yemelyanova to provide information on the case of Ex-Ecology Minister and Burisma Group owner Mykola Zlochevsky.
Zlochevsky revealed the amount of money that was transferred to the representatives of Burisma Group, including Hunter Biden. According to the documents, about $16.5 million was transferred in favor of Hunter Biden, Aleksander Kwasniewski, Alan Apter, and Devon Archer.
According to Derkach, Ex-Prosecutor General Viktor Shokin repeatedly contacted NABU Director Artem Sytnyk in the framework of criminal proceedings involving Burisma, but constantly received formal replies. The activities of Shokin, according to Derkach, irritated Joe Biden during his fifth visit to Kyiv in two years on December 7-8, 2015. The visit was devoted to the issue of removing Shokin as Prosecutor General and the affairs of Zlochevsky and Burisma.
“The instrument issued for pressure was the $1 billion credit guarantee that the United States should have provided to Ukraine: Biden himself acknowledged the pressure in his speech to the U.S. Foreign Relations Council in January 2018,” Derkach said.
On November 11, Derkach said on his video blog that Head of the Specialized Anti-corruption Prosecutor’s Office (SAPO) Nazar Kholodnytsky launched an investigation into his allegations that the NABU had provided information to the U.S. Embassy in Ukraine. He also noted that from May 2014 until October 2015, Burisma transferred $4.817 million to Rosemont, and the latter transferred $871,000 to Hunter Biden.

NET PROFIT OF UKRGASBANK COULD GROW BY 30%

The net profit of state-run Ukrgasbank (Kyiv) in 2019 may amount to UAH 1 billion, which is 30% more than in 2018 (UAH 768.698 million).
“At the end of the year, a profit of UAH 1 billion is expected, which corresponds to the financial result outlined in the bank’s development strategy for 2019-2021. Such plans were approved by the supervisory board of Ukrgasbank,” the bank said on its website on Tuesday.
According to First Deputy Board Chairman Oleksandr Dubrovin, it is planned that by the end of 2019, the bank’s return on capital will be 15.8%.
“The bank is improving its efficiency, and according to the results of 2019, we expect that the return on capital will be 15.8% compared to 13.8% in 2018,” he said.
In addition, Dubrovin said that the cost-income ratio (CIR) is expected to improve from 57% in 2018 to 55% in 2019.
As reported, Ukrgasbank’s net profit in January-October 2019 amounted to UAH 576.3 million, which is 7.1% more compared to the respective period of 2018 (UAH 538 million).
JSB Ukrgasbank was established in 1993. The state represented by the Ministry of Finance owns 94.94% of the shares of the financial institution.
According to the National Bank of Ukraine, as of October 1, 2019, Ukrgasbank ranked fourth in terms of total assets (UAH 114.133 billion) among 76 banks operating in the country.

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SALES OF TELECOMS SERVICES IN UKRAINE 1.2% DOWN

The volume of sales of services by telecommunications and postal communications enterprises in Ukraine in January-September 2019 amounted to UAH 52.6 billion, which in absolute prices is lower than the prices in January-September 2018 by 1.21%, according to the State Statistics Service of Ukraine.
According to its data, the volume of international services amounted to UAH 5.82 billion, which was 19.71%% up from January-September 2018.
At the same time, in absolute prices the volume of sales of services by telecommunications and postal communications enterprises grew by 12.42% in January-September 2019, to UAH 4.76 billion, including a rise of 13.32% in international services, to UAH 1.807 billion.
The volume of sales of mobile communications services in January-September 2019 fell by 2.37%, to UAH 27.72 billion, of which international services amounted to UAH 3.26 billion (35.84% up from January-September 2018).
The volume of sales of Internet services in January-September 2019 rose by 12.8% and amounted to UAH 10.05 billion, including international services fell by 3.79% compared with January-September 2018, to UAH 208.4 million.

INVESTOR PLANS TO INVEST EUR2.9 BLN IN TRADE CENTERS IN UKRAINIAN CAPITAL

Vagif Aliyev, the founder of PrJSC Mandarin Plaza, the investor and developer of Kyiv-based Lavina shopping center, on November 20 launched the first stage of the Blokbuster Mall shopping and entertainment center in Bandery Avenue in Kyiv, investing $400 million in construction. According to an Interfax-Ukraine correspondent, only a Silpo supermarket has started working in the facility. The rest of the stores will be launched on a fan-based basis as they are ready, the founder of Nai Ukraine, the project broker, Vitaliy Boiko, said.
According to him, the cost of investments in the construction of the Blokbuster Mall shopping center was $400 million. The total area of the first stage is 200,000 square meters, the leased area is 110,000 square meters. After the launch of the second phase, which is at an early stage of construction, the total area will be 300,000 square meters, the rental area some 200,000 square meters. The facility is located on a plot of 30 hectares.
“Vagif Aliyev’s pipeline now contains projects for EUR2.9 billion (12 projects of shopping and entertainment centers). This is the second largest indicator in the world in terms of development of retail real estate. Westfield is the first developer in the world with EUR8 billion, and the third one is one of the largest European investors with EUR2.5 billion. The uniqueness is also that all Mandarin Plaza projects are located in one city – Kyiv,” Boiko said at a briefing.

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