Alfa-Bank Ukraine’s additional capitalization by $1 billion at the expense of shareholders who fell under European sanctions is proposed to be carried out in the form of a “perpetual subord” (subordinated loan), Roman, head of the bank’s supervisory board, said.
“There was no ‘perpetual subord’ instrument in the country. This money is in the form of an eternal debt that is never repaid, interest can be paid on it, but this is a subord that goes into Tier 1 capital,” he said in an interview with Interfax- Ukraine”.
“There is no other tool. Firstly, war, and secondly, because of sanctions, we cannot enter the markets,” Shpek said.
The head of the Supervisory Board found it difficult to predict in what terms the necessary permission from European regulators could be obtained in practice and additional capitalization could be carried out in practice.
“Because this is the first time this path has been taken, no one knows how long it will take,” he explained.
According to Shpek, if this happens in half a year, then it will be “normal”, while such terms as a year are not considered.
He clarified that at present the bank’s appeal with the necessary confirmations from Mikhail Fridman and Petr Aven is in the working body in the legal directorate of the Council of Ministers of the European Union, which deals with sanctions issues.
“Now we plan to hold working meetings at the end of this month or the beginning of the next, when they are ready to talk to us, in those authorized bodies of the Council of the European Union,” added the head of the Supervisory Board.
He clarified that since the funds are in the accounts of a British bank, but in a branch in the EU, the decision to lift sanctions for $ 1 billion for additional capitalization of the bank is made in the EU.
“If it were in the UK or the United States of America, the procedure would be simpler. Since in the EU, decisions must be made by representatives of all member countries. In addition, the US has a precedent for adjusting sanctions, while the EU does not,” Shpek said.
The bank is currently operationally profitable and has sufficient liquidity, he said, and its losses are caused by the need to create reserves for loans, the quality of which has deteriorated due to Russian aggression.
Speaking about the alternative of finding an investor, the head of the Supervisory Board stressed that he does not see anyone who is ready to come to Ukraine during the hostilities. “There are no volunteers! Banks today are reducing their portfolios, working through restructuring in order to support the client, and there are not so many new projects. How to evaluate and accept risks?” he explained.
At the same time, according to Shpek, there are constant conversations with those who are interested in working on the Ukrainian financial market in order to resume such attempts when the situation improves.
Alfa-Bank Ukraine, according to the NBU, as of July 1, 2022, ranked 7th (UAH 112.67 billion) in terms of total assets among 68 banks operating in the country. Its net loss in January-July 2022 amounted to UAH 3.52 billion. The financial result of the bank was affected by deductions to reserves at the level of UAH 8.357 billion.
According to the financial institution, its largest shareholders are currently indirectly Andrey Kosogov (40.9614%, after the war the packages of German Khan and Alexei Kuzmichev, which fell under the sanctions), Mikhail Fridman (32.86%) and Petr Aven (12. 4018%), as well as UniCredit S.p.A. (Italy, 9.9%) and the Mark Foundation for Cancer Research (3.8736%). The Bulgarian ex-minister of finance, executive director of the Financial Markets Group of the London School of Economics and technical adviser to the European Commission Simeon Dyankov, in agreement with the NBU, is the trustee of the National Bank for the packages of Kosogov, Fridman and Aven, who also fell under sanctions.
In early June, Dyankov reported on the bank’s efforts to obtain regulatory approval to recapitalize with $1 billion in subordinated debt from sanctioned funds from a number of its shareholders. Speck specified that the amount of $1 billion is caused both by the possible need for $500-600 million to comply with the capital adequacy ratio in 2023, and by the desire to have a resource to increase lending.
David Arakhamia, the leader of the ruling Servant of the People faction, said in an interview with Forbes Ukraine last week that Alfa-Bank Ukraine needs additional capitalization by $1 billion, and if the asset is nationalized, then this amount will have to be paid to the state.
The National Bank of Ukraine has agreed on amendments to the charter of Alfa-Bank Ukraine on renaming it to Sens Bank, Roman Shpek, head of the supervisory board of the commercial bank, said.
“The message just came that the National Bank agreed on changes to the charter. But there is still more work to be done, other documents to be prepared,” he said in an interview with Interfax-Ukraine.
Shpek specified that it is planned to complete the renaming process in December this year.
“Believe me, it is morally and psychologically important for us, the team, not to be associated with the Russian Alfa-Bank. This is the main reason for changing the name at this time,” he stressed.
According to the head of the Supervisory Board, he expects that the bank’s customers will also react positively to its renaming.
Commenting on the decrease in the bank’s assets, Shpek called it rather a positive sign, indicating a high level of control and management of the loan portfolio. The service level for corporate loans is 85%, he added.
“Of course, there were panic moods in the first months of the war, including because of the news about the sanctioning of the final beneficiaries or against the background of fakes that have been constantly trying to spread about us lately. But the situation is leveling off. In August, we recorded an increase in funds for urgent deposits,” the head of the Supervisory Board said.
He added that next year, based on the overall macroeconomic situation, the bank’s financial condition is unlikely to improve significantly, but the bank clearly sees how to maintain operating profitability.
As previously noted in an interview with Interfax-Ukraine, ex-Minister of Finance of Bulgaria Simeon Dyankov, who in mid-April, in agreement with the National Bank, was given the right to vote in the majority stake in Alfa-Bank Ukraine, the board of the financial institution decided to abandon the Alfa brand and continue work under a new brand. The shareholders’ meeting approved the renaming on 12 August.
“When the board was deciding on a new brand, the decision became obvious. For the last two years, our priority has been the development of the Sense SuperApp digital bank,” Alla Komisarenko, head of the bank’s board, explained the choice of a new brand.
Alfa-Bank Ukraine, according to the NBU, as of July 1, 2022, ranked 7th (UAH 112.67 billion) in terms of total assets among 68 banks operating in the country. Its net loss in January-July 2022 amounted to UAH 3.52 billion. The financial result of the bank was affected by deductions to reserves at the level of UAH 8.357 billion.
Alfa-Bank’s (Ukraine) Supervisory Board offers Alfa-Bank (Ukraine) shareholders to direct 90% of net profit for 2021, or UAH 2 billion 987.21 million, to cover losses of previous years.
According to the agenda of the annual meeting of shareholders, which is scheduled to be held remotely on September 30, it is planned to send the remaining 10% of net profit or UAH 331.91 million to the reserve fund, and not pay dividends.
In addition, the meeting plans to approve the supervisory board of Alfa-Bank, consisting of six people, while before the war, at an extraordinary meeting in January this year, the supervisory board was expanded from 10 to 12 people.
At present, out of the 12 members elected by the then meeting in the Supervisory Board, according to information on the website, exactly half remained, of which three independent directors are Yevhen Davidovich, Volodymyr Zhmak and Viktor Lysenko and three representatives of ABH Ukraine are Roman Shpek (Head of the Supervisory Board), Andrew Baxter and David Mark Brown.
Since January, for various reasons, the Supervisory Board has left the representative of ABH Ukraine Petr Aven, Ilyadr Karimov, Vladimir Voeikov and independent directors Ernest Galiev, Adnan Anachali and Elena Volskaya.
According to the bank, its largest shareholders at the moment indirectly are Andrey Kosogov (40.9614%, after the war he received packages of German Khan and Alexei Kuzmichev, who fell under the sanctions in the amount of 20.9659% and 16.3239%, respectively), Mikhail Fridman (32.8632%), Petr Aven (12.4018%), UniCredit S.p.A. (Italy, 9.9%), Mark Foundation for Cancer Research (3.8736%). Ex-Finance Minister of Bulgaria Simeon Dyankov, who in mid-April, in agreement with the National Bank, was given the right to vote on the majority stake in Alfa-Bank, is a trustee of the NBU on the stakes of Kosogov and those sanctioned by Fridman and Aven.
Alfa-Bank (Ukraine), according to the NBU, as of July 1, 2022, ranked 7th (UAH 104.03 billion) in terms of total assets among 68 banks operating in the country. The bank’s net loss, according to the National Bank, for January-June this year amounted to UAH 2 billion 348.5 million.
Last year, Alfa-Bank (Ukraine) increased its net profit to UAH 3 billion 319.12 million from UAH 1 billion 154.79 million a year earlier.
Alfa-Bank Ukraine, at the request of Interfax-Ukraine, confirmed that the remote meeting of the bank’s shareholders scheduled for August 12 had taken place and its decision to change the name of the bank to a new one – JSC Sense Bank will be made public next week.
“When the board decided on a new brand, the decision became obvious. For the last two years, our priority has been the development of the Sense SuperApp digital bank. Our bank has always been technological. This feature is now reflected in the name,” Chair of the bank’s Board Alla Komisarenko is quoted in the response.
The financial institution said that the meeting was one of the key stages in the legal procedures for changing the name, and the next step would be the registration of a new charter.
As previously noted in an interview with Interfax-Ukraine, ex-Minister of Finance of Bulgaria Simeon Djankov, who in the middle of April, in agreement with the National Bank, was given the right to vote in the majority stake in Alfa-Bank, the board of the financial institution decided to abandon the Alfa brand and continue working under a new brand.
“A few days after the start of the war, the board decided to abandon the Alfa-Bank brand. The bank does not want to have anything to do with the aggressor country, even at the level of associations and the brand that operates in Russia,” Djankov said, explaining the reasons for the renaming.
According to the bank, its largest shareholders at the moment indirectly are Andrei Kosogov (40.9614%, after the war he received packages of German Khan and Alexei Kuzmichev, who fell under the sanctions in the amount of 20.9659% and 16.3239%, respectively), Mykhailo Fridman (32.8632%), Petr Aven (12.4018%), UniCredit S.p.A. (Italy, 9.9%), Mark Foundation for Cancer Research (3.8736%). Djankov is a trustee of the NBU on the packages of Kosogov and Fridman and Aven, who fell under the sanctions.
Alfa-Bank Ukraine, according to the NBU, as of July 1, 2022, ranked seventh in terms of total assets (UAH 104.03 billion) among 68 banks operating in the country. The bank’s net loss, according to the National Bank, amounted to UAH 2.35 billion.
Альфа-Банк intends to change its name to Сенс Банк (English: Sense Bank) – after the name of the digital bank Sense SuperApp, which will be promoted from the end of 2020.
This information, pre-distributed by the “Finklub” publication, is confirmed by the bank’s publication in the disclosure system of the National Securities and Stock Market Commission (НКСБФР) about the holding of a shareholder meeting remotely on August 12 this year with a clause on renaming.
In addition, at the meeting it is planned to consider the issues of making changes to the statute, provisions on the shareholders’ meeting and the supervisory board, as well as to the principles of corporate governance.
As the ex-Minister of Finance of Bulgaria, Simeon Dyankov, previously noted in an interview with the “Interfax-Ukraine” agency, to whom in mid-April, in agreement with the National Bank, the right to vote on the majority package of Alfa-Bank was transferred, the board of the financial institution decided to abandon the “Alfa” brand and continue working under a new brand.
“A few days after the start of the war, the government decided to abandon the brand “Alfa-Bank”. The bank does not want to have anything to do with the aggressor country, even at the level of associations and a brand that works in Russia”, Dyankov explained the reasons for the renaming.
According to the bank, its largest shareholders at the moment are Andrey Kosogov (40.9614%, to whom after the war the packages that fell under the sanctions of German Khan and Aleksey Kuzmichev were transferred in the amount of 20.9659% and 16.3239% respectively), Mikhail Fridman (32.8632%), Петр Авен (12.4018%), UniCredit S.p.A. (Italy, 9.9%), Mark Foundation for research on cancer diseases (3.8736%). Дянков is a trusted person of the NBU on the packages of Kosogov and who were sanctioned by Fridman and Aven.
Alfa-Bank Ukraine, according to the NBU, on June 1, 2022, in terms of total assets, took the 6th place (107.35 billion UAH) among 69 banks operating in the country. Its assets decreased by 5.22 billion UAH compared to 2.19 billion UAH in April, and 1.04 billion UAH were additionally allocated to reserves against 0.78 billion UAH in April.
The bank’s net loss in May amounted to UAH 383.2 million, in April – UAH 307.4 million, but overall, for five months, the financial institution made a net profit of UAH 30.1 million.
Alfa-Bank (Kyiv) denied media reports about its withdrawal from the Ukrainian market, the bank’s press service told Interfax-Ukraine.
“This is a fake. We are now resuming the work of branches in those cities where possible. All information is promptly posted on our social networks,” the press service emphasized.
According to the bank’s Facebook post, there are 26 branches in Ukraine in 16 cities of Ukraine. The list is being updated.
According to the National Bank of Ukraine, as of October 1, 2021 Alfa-Bank ranked sixth in terms of total assets (UAH 115.443 billion) among 71 banks operating in the country.
