PrivatBank News

On December 31, 2015 PrivatBank repaid UAH 1.064 bln to the National Bank of Ukraine that had been received as a refinancing loan during the political and economic uncertainty of 2014-2015.

Oleg Gorokhovskiy, First Deputy Chairman of the PrivatBank’s Board noted that refinancing is by no means a cheap source of funding and the bank upholds its obligations considering the positive dynamics in its customer deposits portfolio and stabilisation of the situation in the financial market.

During the last quarter of 2015 the sum of individuals’ deposits in PrivatBank balance sheet grew by UAH 8.52 bln, exceeding the growth in the 3rd quarter of 2015 by UAH 2.9 bln.

One of the largest American banks JP Morgan, on the basis of the results of 2015, has acknowledged PrivatBank as one of the best correspondent-banks for international payment quality and once again conferred the Ukrainian bank with the “Elite Quality Recognition Award”, given to the best banks globally.

According to JP Morgan, PrivatBank has been recognized as one of the best banks for payment performance quality for ten years in a row and once again confirmed its reputation as a financial institution which responds quickly to changes in the requirements of international payment operation registrations.

PrivatBank’s ranking within the «Elite Quality Recognition Award» has constantly increased, equaling 99.74% in 2015, affirming the outstanding level of automation and IT development in payment operations and compliance with international standards for funds transfer operations.

Since 1994, PrivatBank has steadily held the leading position in the banking market for international currency settlements for customers, both by the number of payments and by the quality of processing.

International ratings agency Standard & Poor’s Ratings Services has upgraded PrivatBank’s long- and short-term counterparty credit ratings to ‘B-/C’.

On Monday, 7 December Standard & Poor’s Ratings Services upgraded PrivatBank’s long- and short-term counterparty credit ratings to ‘B-/C’. According to S&P analysts, PrivatBank remains one of the strongest banks in Ukraine despite the current difficult economic conditions.

Unfortunately, some Ukrainian mass media have started to spread the previous “technical” news from S&P of the technical downgrade of ratings (published on Friday, 4 December) by taking it out of context. According to the S&P methodology, PrivatBank’s ratings had to be temporarily downgraded to ‘SD’, which is a mandatory technical procedure for the period of the bank’s negotiations with its creditors on extending Eurobonds’ maturities.

According to the S&P release, the upgrade follows successful completion of PrivatBank’s negotiations with international investors and reflects the bank’s status as the leading commercial bank in Ukraine. As noted in the official report of S&P, PrivatBank’s activity is much more resistant to impact of the current economic and political crises in country than the activities of comparable Ukrainian banks. In S&P analysts’ opinion, PrivatBank is one of the strongest Ukrainian banks, and its business model remains effective even in this difficult financial situation.

According to S&P, PrivatBank has an adequate risk position, reflecting its more conservative risk assumption approach, more sophisticated risk management system, greater diversification of business and higher preparedness for losses which might occur than comparable Ukrainian banks. Considering the above mentioned, S&P analysts expect the asset quality indicators of PrivatBank to remain among the highest in the banking system of the country.

In 2015 PrivatBank (Ukraine) retained its leading position among the largest banks in Central and Eastern Europe and within the top-1000 world banks in the annual ranking published by the British magazine The Banker.

According to The Banker, in 2015 PrivatBank was the only Ukrainian bank among the top-15 bank institutions in the region, holding 13th position among the largest banks in Central and Eastern Europe and 495th position in the Top-1000 world banks ranking.

PrivatBank is the largest Ukrainian bank and the leader of national retail banking. Today PrivatBank serves 13.7 mln accounts of individuals and 619 thousand corporate customers. As at 1 October, 2015 the bank’s assets amounted to UAH 241.809 bln, the bank’s equity was UAH 22.3 bln, and the bank’s net profit for three quarters of 2015 totaled UAH 89.8 mln. The bank’s regional network includes 2,178 branches and outlets, 7,266 ATMs, and 12,263 self-service terminals.

Ukrainians make cashless payments via PrivatBank terminals totaling more than UAH 6 bln monthly. In October 2015, PrivatBank set another national record – the volume of cashless payments for goods and services in its POS-terminal network totaled UAH 6.16 bln. Since the beginning of the year the amount of cashless purchases in the bank’s network has increased by 43%. According to the statistics of the MasterCard company, that ranked Ukraine third in Europe in terms of growth of the number of plastic card transactions.

“Ukraine is quickly catching up with leading European countries by level of cashless payments and is already among the top ten countries of the continent where citizens choose to use cards to pay for goods and services, – says Roman Neginskyi, PrivatBank Deputy Chairman of the Board. The majority of our terminals support payments with contactless cards and we are pleased that this brought Ukraine to the 4th place among all European countries in terms of development of innovative contactless payments”.

PrivatBank is the leader in Ukraine in development of the POS-terminals network. Today, more than 117 thousand terminals operate in Ukrainian retail outlets. Every second store with a PrivatBank POS-terminal provides customers with bonuses of up to 20% for payments by card and every fourth store allows to pay for goods with installments.

More than half of all non-cash payments (52.9%) of Ukrainians are made for purchases at grocery stores and supermarkets, and the average amount of purchases in supermarkets is UAH 98. Ukrainians also actively make cashless payments for clothes and footwear (10.1%), fuel at filling stations (8.1%), electronics and household appliances (7.2%) and medicines in pharmacies (6.9%).

Privatbank transferred UAH 4.987 bln to the state budget for the first ten months of 2015, which twice exceeds the amount of taxes and fees paid by bank for 2013 (UAH 2.416 bln) and is 1.5 times more than for 2014 (UAH 3.489 bln).

PrivatBank paid UAH 2.443 bln of taxes on deposits to the state budget for the first ten months of 2015 and over UAH 677 mln was transferred to state retirement and social funds and the Deposit Guarantee Fund received over UAH 1.84 bln from PrivatBank.

According to the Ukrainian tax administration, PrivatBank is one of the Top-10 largest taxpayers in Ukraine and leads the ranking of the largest taxpayers among banks.

PrivatBank has increased its regulatory capital by USD 220 mln due to a successful deal on subordinated debt maturity extension on international markets. The deal allowed PrivatBank to increase its capitalisation and improve its capital adequacy to nearly 12% (11.87%). The minimum capital adequacy ratio established by the National Bank of Ukraine (NBU) is 10%.

“Almost all investors voted for the transaction extension – declared Chairman of PrivatBank’s Board Olexandr Dubilet. – The deal is great and favourable for the bank, actually we are talking about UAH 10 bln! More than UAH 5 bln of these funds will be included in the bank’s capital.”

According to the NBU, the increase in equity due to deal with international investors will allow PrivatBank to fulfill the capitalisation program agreed with the central bank. The program is based on the results of stress tests conducted as part of agreements between Ukraine and the International Monetary Fund.

“Moreover, I can say that the bank had to inject UAH 8.2 billion following stress testing and the bank complied with this program,”- said Governor of the Board of the NBU Valeria Gontareva.

Major international partners welcomed the increase in the capitalisation of PrivatBank. They noted that it opens up new opportunities not only for the bank but also for the whole Ukrainian financial market.

“Visa has been actively cooperating with PrivatBank for almost 20 years. We are proud that we, together with PrivatBank, were the first to offer Ukrainian consumers a range of new payment products and solutions, including money Visa card-to-card transfers, “Verified by Visa” service and the first mPOS mobile terminals, – remarked Mandy Lamb, Visa General Manager for CIS and Southeastern Europe. – The Ukrainian market offers significant opportunities for the development of electronic payments and innovations, and we are going to collaborate with PrivatBank further to provide Ukrainian consumers with new payment solutions.”

On November 13th, international investors accepted PrivatBank’s proposal on extension of a syndicated loan that will allow the bank to use raised funds to increase regulatory capital, which including the bank’s shareholders’ investments will total USD 220 mln. Moreover, successful negotiations with creditors will allow to extend the bank’s USD 200 mln Eurobonds’ maturity until 2018. Thus, PrivatBank has received UAH 10 bln of support from international investors.

Having received the overwhelming support of its creditors and the seal of approval from the High Court of England and Wales today, PrivatBank, Ukraine’s largest commercial bank, has completed the restructuring of its public debt and extended the maturity dates to February 2021. At a meeting of its creditors in London earlier this week, PrivatBank’s Scheme of Arrangement (the implementation tool for the restructuring) obtained votes from 99% of participating creditors.

The successful restructuring of its public debt will further bolster the Bank’s capital base which will ensure that customers of the Bank can continue to have confidence in PrivatBank. This result will be welcomed by all stakeholders given the integral role that PrivatBank plays in the banking system of Ukraine.

The restructuring, which has been conducted with full overview and approval of the National Bank of Ukraine, will:

• result in an increase of the existing capital adequacy ratio of the Bank to above 11%;
• result in an increase of the liquidity position of the Bank.

The restructuring, which will formally complete next week, will also enhance value for creditors of the Bank, including its bondholders, and as mentioned above, will provide continuing security for the Bank’s loyal customer base and deposit holders.

This transaction is unique as PrivatBank is the only Ukrainian bank that has successfully restructured its external indebtedness via a Scheme of Arrangement sanctioned by the English court.

In September, PrivatBank’s website was one of the most visited global banking resources. Head of Information Technology Division Dmytro Dubilet reported that PrivatBank’s website took 11th position in the SimilarWeb ranking, and the Privat24 took 41th. If you combine these two results, PrivatBank entered the Top-10 banking websites in the world.

“PrivatBank’s website (with Privat24) is one of the ten most visited bank websites in the world. Only Chase, Bank of America, Wells Fargo and other global giants are higher,” – says Dmytro Dubilet.

According to SimilarWeb, PrivatBank’s website was visited 24.3 million times in September. The most visits of the last six months was in July when the website was visited 28.9 million times.

In Ukraine, PrivatBank’s website takes 16th position in the overall website traffic ranking, and Privat24 is in 31st position among the most popular resources.

Innovation by Ukraine’s leading bank setting the industry trend for the coming years

Ukrainian cloud operating system (OS) Corezoid will take part in the FinDevr annual financial conference in San Francisco. Developers of the system are going to present it to leading global banks and technology corporations, including Barclays, JP Morgan Chase, WellsFargo, Western Union, Intel, Sony and many others. During the event, Ukrainians are planning to introduce participants to Corezoid functionality, which allows any company to make a breakthrough in the digital world.

“We are pleased to see a Ukrainian company among our participants and we hope that you will manage to achieve all your goals”, – says David Penn, one of the organisers of FinDevr.

Corezoid is a cloud OS developed by PrivatBank E-Business Center under the direction of Oleksandr Vityaz. It allows anyone to create their own “digital core”, which can be used in various areas: finance, IT, manufacturing, agriculture, education, health care, construction, telecommunications, trade, logistics, science, public administration, public services, etc. The key advantages of the system are: the opportunity to move to Corezoid with minimal involvement of developers and support of business-processes without the need for programming skills. Corezoid has been available on Amazon Marketplace since August 2015. Now this system is used in Privat24 Internet bank.

“We made every effort to adapt existing market solutions to our needs but it was either a long and expensive process or a very long and very expensive process! The cost of making changes to our systems was always too high,” explains Oleksandr Vityaz, Deputy Chairman of the Board of PrivatBank.

As a result of these issues, the idea of cloud OS Corezoid emerged in 2005. Thanks to its implementation, the bank replaced most Privat24 developers with business-analysts and shifted key programmers to other projects. Also, Corezoid allowed to reduce the quantity of software code by several multiples.

The system was shown for the first time internationally at the Finovate conference in May 2015. Since then, Corezoid has received many positive reviews including one from Chris Skinner, a worldwide expert in banking innovations.

“You have gone beyond banking! It’s exactly what I wrote in my book, but I was not sure if I would ever see something like this in action,” said Chris after becoming acquainted with Corezoid’s capabilities.