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Ukraine Nationalizes Largest Bank After Stability Concerns

A client enters PrivatBank as others stand by in the center of Kyiv, Ukraine, Dec. 19, 2016.

Ukraine is nationalizing its largest bank following concerns over its stability.

The cabinet agreed late Sunday to move PrivatBank into full state ownership, saying the move was carried out ``in close coordination with international financial organizations'' and with the consent of PrivatBank's owners - an apparent reference to the oligarchs Ihor Kolomoisky and Hennady Boholyubov, who together control over 90 percent of the bank.

Ukrainian President Petro Poroshenko said in a statement Monday that the decision ``saved both the bank and the banking system'' in Ukraine because PrivatBank lacked capital and had been hit hard by the conflict in eastern Ukraine and the accompanying economic crash in 2014 and 2015.

“It is obvious that the only way to save the bank, and its customers' money, was to make it state property,” Poroshenko said. “The alternative would appear irresponsible because it would mean closing our eyes, hiding our heads in the sand and waiting for the bank to fail.”

Poroshenko said he had submitted a bill to the Ukrainian parliament pushing for additional deposit guarantees for the bank's customers. “I say to the customers of PrivatBank - remain calm,” he said.

There was no obvious sign of panic after the nationalization in the capital, Kyiv, or of lengthy queues outside branches of PrivatBank, which dominates Ukraine's retail banking sector.

PrivatBank and its owners have yet to comment. Last week, PrivatBank dismissed talk of nationalization as an “informational attack” aimed at destabilizing Ukrainian politics.