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 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

Raiffeisen to file lawsuit against new Croatian banking law

Austria's Raiffeisen Bank is preparing to file a complaint at the Croatian constitutional court later in July against a recent law that aims to declare thousands of its loans to Croatians void, ... more

94% of creditors of Azerbaijan's IBA approve debt restructuring plan

An overwhelming majority of creditors (93.9%) to the International Bank of Azerbaijan (IBA) approved the bank's ... more

Lebanon becomes European Bank for Reconstruction and Development shareholder

Lebanon has become the fifth member country from the Southern and Eastern Mediterranean (SEMED) region to join the European Bank for Reconstruction and Development (EBRD), becoming a shareholder with ... more