Ukraine's government said late on Sunday it would nationalize the country's largest bank, Privatbank, in a move meant to "save the entire banking system" and avoid a financial meltdown.

PrivatBank controls one-third of the east European country's deposits and even has branches in the Baltic states, informs AFP.

The bank, partly owned by Ihor Kolomoyskyi - a politically powerful billionaire and former Dnipropetrovsk governor who became an early target of Ukrainian President Petro Poroshenko's uphill fight against corruption, will be taken over by the country's Finance Ministry.

The Ukrainian government said in a statement that it was now the "100 percent owner of PrivatBank and guarantees the uninterrupted functioning of this institution and the safety of its clients' money."

Privatbank's nationalization followed months of rumours about bank's problems, including debts and insider lending practices.