The National Bank of Ukraine has not approved the appointment of a new head of Alliance Bank for three months now. This may mean preparations for the withdrawal of the financial institution from the market and a desire to close the bank’s existing international projects, into which it probably accidentally ended up together with two government agencies - Ukrgasbank and Ukreximbank.
It is quite possible that for this reason the NBU also maintains silence in communicating with the media regarding the accumulated problems in the Alliance and, despite numerous violations, allows the institution to work. In addition, it cannot be ruled out that the NBU’s decision is driven by “state interest”: in the event of bankruptcy and withdrawal from the market, the debt to the state company Ukrenergo under guarantees for UAH 1.7 billion will not be repaid.
There is a replacement in the team
On May 23, 2024, Alliance Bank finally fired Yulia Frolova from her position as Chairman of the Board. She was put on the international wanted list back in January 2024 as part of an investigation by the National Anti-Corruption Bureau into the theft of funds from Ukrenergo and United Energy LLC, which is close to Igor Kolomoisky. The role of the bank in this transaction was, according to investigators, that the financial institution issued guarantees for United Energy in an obviously inflated amount, in excess of authority, and subsequently refused to repay these guarantees to Ukrenergo when the private company did not pay for supplied electricity. The scandalous purchase took place in March 2022, after which NABU opened a case of theft of UAH 716 million. state-owned companies. This is the amount of established damage to the state. The entire amount of guarantees that Ukrenergo is trying to recover from Alliance due to a civil suit is UAH 1.2 billion, while the total amount of guarantees was UAH 1.7 billion.
According to media reports, Frolova has been managing the bank from abroad since March 2022. And as the investigation progressed, it was clear that she would be one of the key suspects. In March 2024, the pre-trial investigation was completed and the case was sent to court. A few weeks later, there was an unexpected turn in it: Alexey Nosov, a lawyer and partner of the Miller company, was detained for taking a bribe. He is being attempted to give a bribe of $200 thousand to NABU detectives and SAPO prosecutors in the interests of Alliance Bank so that they change the jurisdiction. This would make it possible to remove the case from the jurisdiction of the anti-corruption vertical, turning the case, for example, into “fraud.” And then it would probably be much easier to resolve the issue of a criminal record and a generally successful investigation.
With things to go
There are many reasons for this decision. Firstly, the bank’s regular failure to fulfill financial guarantees provided to commercial businesses. In addition to the story with Ukrenergo, in the court register you can find a lot of other evidence of how the bank not only fails to pay guarantee obligations, but also assumes them in much larger quantities than NBU regulations allow.
It is noteworthy that in the promotional material about itself on the NV website, the bank boasts of bank guarantees as its main product: the institution itself estimates its volume of issued guarantees at UAH 6.5 billion. and a market share of 9%. Of course, the authors of the advertising note do not indicate that 1.2 billion UAH. of this volume is the debt to Ukrenergo, and another about 500 million UAH. - These are other outstanding debts in the oil and gas sector and the infrastructure sector.
The article also boasts that the bank is the only private institution to receive small business financing from the International Finance Corporation (IFC, an arm of the World Bank). Indeed, this is the case: IFC allocated $11 million to the Alliance even before the start of the full-scale Russian invasion. Other partners of the corporation in Ukraine are Ukreximbank and Ukrgasbank, state banks. In an interview in 2024, the head of the IFC representative office in Ukraine, Elena Voloshina, mentions a partnership with Alliance Bank, but without details. At the same time, in the media - except for advertising publications of the Alliance itself - you cannot find at least some mention of the successful implementation of this project.
The reason may be that IFC lent money to a financial institution with a very dubious reputation, and to stop cooperation by admitting its mistake would be a blow to the image of the structure itself and the risk department. All the abuses of the Alliance were always in plain sight. For example, numerous violations related to neglect of the rules of financial monitoring. We are talking about fines issued by the National Bank for abuses with domestic loan bonds, the purpose of which could be the legalization of criminal proceeds, ignoring the analysis of clients’ financial transactions, and active work with the illegal gambling business. Also on the list of Alliance clients for a long time was the GlobalMoney payment system (in the media it was associated with figures from the time of Viktor Yanukovych), through which the attackers financed the activities of the illegal terrorist groups “LPR” and “DPR”. GlobalMoney was accused of withdrawing at least UAH 6.5 billion from Ukraine. It's close from them
800 million were withdrawn due to a scheme with an electronics trade operator - the Allo company, one of GlobalMoney’s partners in Ukraine, which sold “electronic money” directly at their cash registers. Alliance Bank was actually the issuer of these funds. In addition, “withdrawal of funds” is one of the articles by which the media can link the Alliance and its activities with Firtash. According to one of the proceedings, in 2017-2018, the management of Firtash’s regional gas companies could illegally withdraw funds through the bank, which led to a significant increase in debt to Naftogaz. So, of course, such a bank should not be given international financing. It would be better to take it out of the market altogether.
Silence of the Magnificent
So why is the National Bank delaying this? And why does he ignore requests from Ukrainian and Western media when asked about the real state of affairs at Alliance Bank? The first possible reason is the formalization of the results of the audit that the National Bank should have carried out in the Alliance, as an institution that systematically ignores the requirements of financial monitoring. Formally, the bank will have several weeks to eliminate the reasons for the comments. However, the systematic strategy of the head of the institution, Pavel Shcherban, to withdraw assets from the bank and create a number of “reserve airfields” indicates that it will not be possible to pull out of the dive this time, which minority shareholders have probably already been warned about.
The second reason is not the desire to lose face in front of an international partner - IFC, which can be assumed when assessing the risks of cooperation with the Alliance, also relied on the opinion of the NBU. However, this reason can be circumvented, as happened in the case of Megabank. Let us remember that the Kharkov financial institution was withdrawn from the market by the regulator without blinking an eye, despite the fact that its shareholders included the same IFC, the European Bank for Reconstruction and Development, and even the German government.
And finally, such selective blindness of the NBU can and most likely will lead to the loss of UAH 1.7 billion by the state, as well as the funds of other companies and more than UAH 2 billion. deposits of the population, if one day - when the NBU finally decides to withdraw it from the market - only a table and two chairs will remain from Alliance Bank.
