The History of PrivatBank Commercial Bank JSC

PrivatBank is one of the largest banking institutions in Ukraine. The bank not only boasts stable financial performance but also continues to grow despite several crises that the Ukrainian economy and banking sector have experienced. Currently, considering its total capitalization, this entity alone constitutes over a quarter of the entire banking system in Ukraine.

The company's main focus is on serving individuals and corporate clients, offering attractive savings services for depositors. One out of every three monetary transactions in the country flows through PrivatBank.

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Activities

The main office is located in Dnipro. Regional offices are present in each Ukrainian region. PrivatBank is a combination of several entities, including domestic banks and institutions from Portugal, Latvia, and Italy. PrivatBank has representative offices in Almaty and even Beijing.

The company's management actively fosters partnerships with subsidiary institutions and seeks collaborations with foreign counterparts. For instance, the PrivatBank brand is represented by Moskomprivatbank in Russia, Paritare Banka in Latvia, as well as Tao Bank in Moldova, Belarus, Georgia, and Kazakhstan.

History

Although CJSC "Commercial Bank "PrivatBank" was founded back in 1992, the bank's period of active development coincided with the tenure of the controversial Pavel Lazarenko as the Prime Minister of Ukraine. The current owners of PrivatBank are Gennadiy Bogolyubov and Ihor Kolomoyskyi. The bank's board chairman was Serhiy Tihipko. Until recently, the bank's key focus was on developing payroll projects and attracting enterprises for financial activities.

The "Privat" group comprises one of the most potent financial instruments in Ukraine, uniting numerous industrial facilities, agricultural enterprises, companies in the financial and insurance sectors.

In 1996, PrivatBank became the first participant of VISA International among Ukrainian commercial structures. Even amidst crisis conditions, the bank continued to evolve by optimizing its expenses, attracting new clients, and searching for lucrative investment opportunities. By 2013, the bank issued over 51% of credit cards in Ukraine, and currently, one-third of Ukrainians consider PrivatBank the most stable bank in the country.

Such a vast number of bank cards necessitated developing a partner network, customer infrastructure, and branch network. As a result, over 8,000 ATMs are connected throughout Ukraine, with over 3,000 branches currently operating. Looking ahead, it's worth mentioning that over 400 branches are planned to be closed in 2016 as part of expense optimization. This move is linked to the annexation of Crimea, as well as the decree of the NBU "On the termination of banking activities in temporarily occupied territory."

PrivatBank became the first company in Ukraine to offer mobile banking services to its clients. The Privat24 system is widely used by cardholders.

Income and Turnover

According to the financial activity report for 2015 (unaudited):

• Total financial assets: 258,277,000,000 UAH (compared to 212,813,000,000 UAH in 2014);
• Total capitalization: 27,488,000,000 UAH;
• Bank's interest income: 5,611,000,000 UAH;
• Total income, net of all taxes and expenses (net profit): 216,000,000 UAH;
• Additional income (excluding banking services): 816,000,000 UAH (compared to 628,000,000 UAH in 2014);
• Monetary mass increase: 33,920,000,000 UAH (compared to 14,300,000,000 UAH in 2014).

Based on these financial indicators, the bank demonstrates steady growth, almost doubling certain performance metrics from 2014 despite the crisis-ridden economic and political situation.

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Scandals Related to PrivatBank

The reputation of this major company has been called into question numerous times by politicians, entrepreneurs, and the media. This is largely due to the charisma and ambiguity of the owner of the "Privat" group - Ihor Kolomoyskyi. Although positioning himself exclusively as a businessman and entrepreneur, he briefly held the position of governor of Dnipropetrovsk Oblast, owns several TV-radio companies, and actively promotes his political projects. Formally, scandals and legal proceedings have not had a negative impact on the bank's operations.

In July 2015, the rating agency Fitch downgraded the bank's rating to "C." Just a few months later, Fitch further downgraded the bank's rating to RD. On September 23, 2015, the rating agency Standard & Poor's lowered the structure's rating to a level indicating partial bank failure to fulfill obligations to issuers. Despite this, the bank remains one of the most reliable in Ukraine, and the rating downgrade is largely attributed to the country's economic slowdown and political crisis.

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