As we warned on Friday, the military escalation in Ukraine has had dire consequences for the financial state of the country, its banks, and ultimately its people. The central bank promised to rescue domestic banks so long as they agreed to its complete control and it appears the first consequences of that “we are here to help you” promise is coming true:
- UKRAINE’S PRIVATBANK LIMITS ATM WITHDRAWALS TO UAH1,000/DAY ($103/day)
Privatbank is Ukraine’s largest bank and while claiming this move is temporary (just like Cyprus’ capital controls), the bank has also ceased new loans amid what it calls “geopolitical instability”. In summary, you can’t have your money back! Expect long angry lines at Ukrainian banks on Monday morning (and at the pace of collapse in the Hyrvnia, hyperinflation next).
Ukraine’s largest commercial bank, Privatbank, announced temporary limits on cash withdrawals for its account holders and suspended writing new loans, saying in a statement the measures were intended to stop those undermining the political situation in the country. “A temporary limit on withdrawals is needed to stop the forces that are working to destabilize the situation [and] are using the cash for [their] sabotage,” the bank said in a statement. The bank didn’t clarify which political forces it was referring to.
The bank first announced withdrawal limits of 1,000 hryvnia ($103) a day at both automated teller machines and in over-the-counter transactions.
Privatbank’s announcement was the first case in which a major Ukrainian bank has limited customers’ immediate access to cash in the local currency since the military tensions erupted. Privatbank is the largest retail bank by number of clients in Ukraine, a country of approximately 45 million people.
Last week, the National Bank of Ukraine introduced a $1,500 daily limit on foreign-currency withdrawal.
But perhaps the most notable, somewhat hidden, comment from the bank was this:
Privatbank said it was suspending all its credit lines issued to both private and corporate customers, including credit cards. It said it would no longer accept debit cards from other banks in the Crimea.
In other words, we won’t allow the people of Crimea (the region now in play with the Russians) to ‘run’ on our bank…
Privatbank said its measures were a “rational” response to the current situation and they were designed to help the bank serve its customers and protect the national currency.
We wonder what ‘loophole’ the uber-wealthy will find (as in Cyprus deposit shifts to the UK) to extract their deposits before the real capital controls collapse the currency.