The Ukrainian government has officially approved the nationalization of Sense Bank, previously known as Alfa-Bank Ukraine, one of the country’s top commercial banks. Sense Bank, owned by Russian billionaires Mikhail Fridman and Pyotr Aven, ranks as the 11th largest bank in Ukraine in terms of assets and holds significant importance in the country’s financial system.
The decision to nationalize Sense Bank comes after the National Bank of Ukraine (NBU) announced its intention to remove the systemically important bank from the market and place it under temporary administration. The NBU assures that the transfer will be conducted safely and will not have any noticeable impact on the bank’s clients. Starting from July 24, the lender will operate as a state-owned entity.
The Finance Ministry has assured the public that the nationalization of Sense Bank will not affect the fulfillment of the bank’s obligations to its depositors and clients. The ministry also stated that after the end of martial law, it will seek to attract investors for the sale of Sense Bank.
The decision to seize and nationalize the bank was first proposed by the government in December 2022, following the bank’s rebranding. In June 2023, Ukrainian President Volodymyr Zelensky signed a law granting the government the power to nationalize banks owned by individuals who have been sanctioned due to their alleged ties to Russia’s military operations in Ukraine.
Mikhail Fridman and Pyotr Aven, the Russian billionaires who own Sense Bank through the Luxembourg-based holding company ABH Holdings, have faced sanctions from Western authorities due to their alleged connections to the Russian government. These sanctions include asset freezes and travel bans. However, Fridman and Aven have challenged these restrictions in court.
ABH Holdings, the majority owner of Sense Bank, has pledged to dispute the nationalization in international courts in order to protect its investment and mitigate losses. The company has expressed willingness to change the ownership structure of the bank and sell 75.6% of Sense Bank to a European investor, ensuring that no funds flow to sanctioned shareholders after the transaction. However, the Ukrainian central bank reportedly blocked the sale.
Sense Bank used to operate as the Ukrainian branch of Russia’s largest private lender, Alfa-Bank. Alfa-Bank was targeted by EU sanctions in February 2023, prompting Fridman and Aven to consider selling their stakes in order to avoid further penalties.
The nationalization of Sense Bank is a significant development in Ukraine’s banking sector and reflects the government’s efforts to assert control over banks whose owners are subject to sanctions. The future of Sense Bank as a state-owned entity remains to be seen, and the Finance Ministry’s plans to attract investors for its sale will be crucial in determining its trajectory.