The central bank said Ukraine was ready to support PrivatBank with liquidity, adding that it did not see the nationalisation as significantly impacting the currency market or inflation levels.
The state will issue new bonds worth 43 billion hryvnia ($1.63 billion) as part of the recapitalisation, which will also count the holders of PrivatBank's Eurobonds in a bail-in.
PrivatBank's former shareholders had agreed to restructure loans paid to insiders by July 1 next year, the central bank said, while the finance minister said the bank would be sold once it was back on its feet.
"Unfortunately, the problems faced by the Bank, which have been accumulated over many years, have recently deteriorated," the central bank said. "These problems were mainly caused by imprudent lending policy pursued by the Bank, which led to capital losses."
Recapitalising PrivatBank and other large lenders and reducing their lending to shareholders was one of the tasks mandated by a $17.5 billion International Monetary Fund aid-for-reforms programme.
Kolomoisky's control of strategic industries, including energy and media holdings, has put him at the centre of ongoing power battles among the political elite since street protests ousted Moscow-backed Viktor Yanukovich and the pro-Russian rebellion erupted in the east.
PrivatBank made no official comment but its deputy chairman on Sunday night said the lender had come under a series of "information attacks", having already suffered from economic turmoil and violence in the eastern Donbass region.
"A systemic bank of this magnitude could not be allowed to fail," said Francis Malige, the EBRD's Managing Director for Eastern Europe and the Caucasus, in a statement.
The EBRD said it was the "right way forward" for Ukraine and later told Reuters that it could take a stake in PrivatBank if the recapitalisation and clean up go well.
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