The Banking & Finance practice of Integrates in Ukraine has had its hands full lately, according to Partner Igor Krasovskiy, mainly thanks to the economic impact of Covid-19, Ukraine’s energy strategy, and the country’s commitments to international financial institutions.
“The economy was impacted negatively by the coronavirus, so a lot of our clients had to opt for restructuring,” Krasovskiy says and adds that he and his team advised both international and local lenders on a number of restructuring deals. “We recently advised a group of foreign lenders on the restructuring of a Ukrainian bank,” he says. “That transaction was very interesting because, for the first time in Ukraine, it entailed the conversion of senior loans into subordinated loans and a so-called capital instrument.” Krasovskiy also lists the restructuring of EBRD and IFC’s loans extended to Globino as another example.
Furthermore, Krasovskiy points to the government’s commitment to divest from the banking sector as another source of work. According to him, the IFC and Ukraine’s Ministry of Finance recently struck a breakthrough deal with regard to state-owned Ukrgasbank. As a part of the deal, the IFC provided a EUR 30 million loan to the bank (as reported by CEE Legal Matters on January 28, 2021) with an option to convert the outstanding loan into shares, which will pave the way for future privatization of Ukrgasbank and other state-owned banks. “That has, in turn, also sparked foreign investors’ interest in the acquisition of Ukrgasbank’s shares,” Krasovskiy says.
In addition, green bonds have also kept Krasovskiy and his team busy. “Ukraine plans to move from traditional to alternative energy sources,” he says and explains that many investors decided to seize the opportunity to tap into the green bonds market. “For instance, we are already advising one of our clients on a green bonds issuance.”
Last, but not least, Ukraine’s burgeoning fintech sector brought more work to the firm, Krasovskiy explains. “New legislation, which will harmonize Ukraine’s payment law with the EU laws, should be adopted shortly,” he says. “The regulation will facilitate online payments, as well as crypto currency use,” he adds. Krasovskiy notes that the expected change has attracted international payment systems and fintech companies to invest in Ukraine. As a result, Integrites is advising on the acquisition of a Ukrainian mid-sized bank by a foreign fintech company, it has helped establish a number of financial companies, and it has been handling a lot of regulatory work.
Krasovskiy expects that, moving forward, more investors will flock to the Ukrainian market, once lockdowns are lifted globally. He believes that, despite Ukraine’s unfavorable country risk, some of that money will be invested in Ukraine thanks to the potentially high returns.