KIEV, Sept. 30 – The National Bank of Ukraine on Tuesday injected $1 billion into Prominvestbank, the country’s No. 6 bank, to support its liquidity after the bank experienced difficulties making payments.

Prominvestbank had been losing deposits rapidly over the past several weeks amid a shareholder dispute aggravated by media reports that the bank may go into bankruptcy.

But the NBU in a statement dismissed the reports, saying Prominvestbank had been under attack from undisclosed rival business groups seeking to gain control over the bank.

The $1 billion loan is a gigantic loan by Ukrainian standards, underscoring the scale of the problem faced by Prominvestbank, and the NBU’s desperate attempts to fix it.

"The raider attack on the bank caused a panicked mood amongst depositors and a withdrawal of people's deposits, which caused difficulties with making payments," the bank said in a statement.

The development comes amid a severe financial crisis that has been crippling banks and other financial institutions around the world, following the spectacular collapse of Lehman Brothers, one of the biggest independent investment banks in the U.S.

Over the past week, two commercial banks in the U.S. went into bankruptcy, including Washington Mutual, whose banking business was later acquired by JPMorgan Chase, and Wachovia, which was later acquired by Citigroup.

Fitch Ratings last week revised to “negative” from “stable” the outlook for the Ukrainian economy, taking the same action on nine Ukrainian commercial banks. Prominvestbank was not on the Fitch list.

Oleksandr Kireyev, the head of the NBU’s banking supervision department, said Prominvestbank’s poor liquidity should not be interpreted as the fallout from the world financial crunch. He said Ukrainian banks had 19 billion hryvnias, or $3.8 billion, in liquid assets, the level he had described as “great.”

“The level of liquidity is great,” Kireyev said. “About 19 billion hryvnias are in liquid form. This is quite enough to support mandatory reserves.”

However, Kireyev said that any Ukrainian bank that may face liquidity problems may appeal to the NBU and the central bank will provide its support.

Prominvestbank was under some pressure for more than a month, fighting off media reports of potential problems at the bank.

Prominvestbank last month even threatened to sue those businesses and individuals that had been “disseminating untrue information” about the bank.

Meanwhile, Finance Minister Viktor Pynzenyk on Tuesday expressed concerns about the potential effect that the world financial crisis may have on the Ukrainian economy.

“Those risks that the world is gong through now will inevitably affect the Ukrainian economy,” Pynzenyk said.

Pynzenyk argued that Ukrainian businesses have been borrowing heavily over the past several years, but the source of borrowing had dried up.

He also said that the housing construction slowdown in the US and in the rest of the world will reduce demand for the steel and that may affect Ukraine, the world’s eighth biggest producer and exporter of steel. (tl/ez)