KIEV: The Ukrainian government will nationalise three of the country's top private banks by buying controlling stakes for a total of 1.25 billion dollars, Prime Minister Yulia Tymoshenko said Wednesday.
"These banks will de facto become public as of today," Tymoshenko was quoted as saying by Interfax news agency, though she added they should be re-privatised once they resume their normal functioning.
The government will acquire 99.7 percent of Rodovid Bank, 84.21 percent of Ukrgazbank and 99.93 percent of Kiev Bank, Tymoshenko said, putting the total cost of the acquisitions at 1.25 billion dollars (889 million euros).
Ukraine has been hit by one of the world's worst recessions amid the global economic crisis and is depending on a 16.4-billion-dollar loan from the International Monetary Fund (IMF) to keep its economy afloat.
But the IMF has set conditions for Ukraine to qualify for the next, 2.8-billion-dollar tranche of the loan including instituting a measure of stability in its struggling banking sector.
"These three banks have received sufficient capital from the government to restart their work and honour their responsibilities to their clients," Tymoshenko said. The three banks count 730,000 clients, she added.
The government also plans an injection of funds in two other hard-hit banks, Nadra and Ukrprombank, but Tymoshenko said the plan will depend on the willingness of the banks' creditors to restructure their debt.
Overall, Ukraine has earmarked 44 billion hryvnias (4.1 billion euros, 5.74 billion dollars) to recapitalise and restore confidence in the banking sector as many institutions teeter on the brink of collapse.
The IMF's chief representative in Ukraine, Max Allier, hailed Kiev's decision on Wednesday. The organisation has said it might increase the third tranche of its loan payments to Ukraine.
"Many difficulties remain before us. We have to keep working to re-establish the normal functioning of the entire Ukrainian banking system," Allier said at a joint news conference with Tymoshenko.
Ukraine received 4.5 billion dollars from the IMF in November and 2.8 billion dollars in May.
An IMF delegation is due in Kiev later this month to evaluate how Ukraine is meeting the institution's criteria for curbing inflation and stabilising the economy.