Aequo advised Deposit Guarantee Fund on restructuring of its multi-billion debt to the State of Ukraine

Aequo acted as a Ukrainian law counsel on the restructuring of a multi-billion debt to the Deposit Guarantee Fund of Ukraine (DGF) towards the State of Ukraine due to mass pay-outs of guaranteed deposits of Ukrainian banks failed in 2014-2017. Aequo, in cooperation with Lazard Freres and KPMG, financial advisers, developed the restructuring scenario, participated in its promotion among the stakeholders — the Ministry of Finance, the National Bank of Ukraine, the World Bank, the European Bank for Reconstruction and Development and International Monetary Fund, and elaborated the legal instruments to effectuate the restructuring.

The approved restructuring concept anticipates conversion of the DGF's indebtedness into contingent liabilities, depending on the recoveries from the assets of the failed banks and their owners, as well as achieving certain financial targets by the DGF. To implement the concept the DGF assisted by the team of consultants prepared and promoted the respective draft law “On the Stability of Deposit Insurance System” passed by the Parliament on 1 April 2022 (on top of restructuring matters this law increases the guaranteed deposit amount up to UAH 600,000 and brings Oschadbank into deposit guarantee system).

Besides, Aequo assisted with drafting and negotiating the agreement between the DGF and the Ministry of Finance designed to elaborate the mechanics for the transfer of the amounts recovered by the DGF from the failed banks. Last but not the least, Aequo and Freshfields, legal counsel under EU law, performed a gap analysis of the existing Ukrainian deposit guarantee and bank resolution legislation against EU legislation, to prepare the road map of further harmonization of the Ukrainian legislation in line with European standards.   

"We have been honored to have assisted the DGF during the last 2.5 years with this project, which is vital not only for the deposit guarantee system, but for the entire Ukrainian economy. When Ukraine wins the war (which will definitely happen soon) our financial system will need to tackle the new challenges, so the restructuring of the DGF's indebtedness and increasing the trust of the Ukrainian population to the Ukrainian deposit guarantee system has been done just  in time. We are especially thankful to EBRD which made possible this fruitful cooperation among the DGF and our consortium of consultants", — comments Yulia Kyrpa, partner, head of Banking & Finance of Aequo.