Ukraine central bank slams PwC over PrivatBank audit

By bne IntelliNews January 19, 2017

The National Bank of Ukraine (NBU) has accused PricewaterhouseCoopers, PrivatBank's auditing firm, of providing an inadequate evaluation of collateral under loans provided by the çountry's largest lender by assets, which was nationalised in December.

PwC had no right to conduct an evaluation of the assets that the bank took as collateral, the officials of the NBU's risk department said in an interview with delo.ua online outlet published on January 18. The regulator is considering holding the auditor accountable for misconduct, which may include criminal or civil persecution.

In December, the Ukrainian authorities announced PrivatBank's nationalisation after its failure to fulfil a three-year recapitalisation programme agreed in February 2016. According to the NBU, the hole in the lender's balance sheet as of early December stood at UAH148bn ($5.6bn). Related-party lending accounted for the vast majority of the sum, the NBU said.

"We share the view that PrivatBanks auditors should be held responsible for manipulations that led to concealing the real situation in PrivatBank for many years," Alexander Paraschiy at the Concorde Capital brokerage in Kyiv wrote in a research note on January 18. "Most likely, PwC will face claims not only from the Ukrainian government, but also from the bank's private creditors, especially those that were bailed-in."

Concorde believes that PwC's reputational losses may cast a shadow on other Ukrainian banks that it is auditing, including top-ten lenders Oschadbank and Ukreximbank, which are both state-controlled.

Related Articles

Moody’s places Slovenia’s largest bank NLB on review for downgrade

Moody’s Investor Service announced that it has placed on review for downgrade the ratings of Slovenia’s largest lender Nova ... more

Multilateral lender IIB to place its inaugural transaction in Czech koruna

Moscow-based development bank International Investment Bank (IIB) has priced its denominated private placement transaction with three-year floating rate notes in koruna of CZK501mn, the bank said in ... more

Moldova to take over major stakes in country’s largest banks

Moldova’s government has instructed its Public Ownership Agency (APP) to take over major stakes in the country’s largest banks, Moldova-Agroindbank and Moldindconbank, that were previously ... more

Dismiss