Ukrainian President Petro Poroshenko has signed a decree dismissing powerful tycoon Ihor Kolomoyskiy as governor of Dnipropetrovsk, a region near separatist-held territory in the southeast.
Kolomoyskiy's departure follows a public dispute over control of state oil companies and accusations that the prominent former ally of Poroshenko was using private armed forces to protect and promote his interests.
The showdown deepened concerns about the stability and security of Ukraine, which is struggling with a Russian-backed rebellion in the eastern provinces of Donetsk and Luhansk and severe economic troubles.
According to a statement posted on his website at 1:45 a.m. on March 25, Poroshenko signed the decree after Kolomoyskiy submitted his resignation as governor of Dnipropetrovsk, which lies southeast of Kyiv and borders the Donetsk province to its east.
It said Poroshenko signed the dismissal decree during a meeting with Kolomoyskiy and showed a photo of the two at a table, with only the back of the tycoon's head visible.
The statement said Poroshenko told Kolomyoysky that Dnipropetrovsk "must remain a bastion of Ukraine in the east and protect the peace and calm of our citizens."
The wording reflected persistent concerns in Kyiv that the Russian-backed rebels may seek to push further west despite a European-brokered deal on a cease-fire and political settlement of the conflict, which has killed more than 6,000 people since April 2014.
Kolomoyskiy, 52, billionaire co-founder of the banking chain Privatbank, has financed battalions of pro-Kyiv forces fighting the separatists, which Kyiv and Western governments accuse the Kremlin of supporting with weapons and personnel.
He was one of several tycoons, considered too rich to bribe, who were appointed to leadership positions in a bid to ensure stability after the ouster of Russian-backed President Viktor Yanukovych in February 2014 following months of protests over his decision to scrap plans for closer ties with the EU.
But an uneasy alliance with Poroshenko appeared to disintegrate in recent weeks as the tycoon clashed with the government over control of two state-owned energy companies, Ukrnafta and Ukrtransnafta.
Last week, Ukraine's parliament passed a law reducing Kolomoyskiy's power as minority shareholder in the companies and permitted a management change that he had previously blocked.
On March 22, armed men occupied the Kyiv headquarters of Ukrnafta, and lawmaker Serhiy Leshchenko said they were linked to Kolomoyskiy.
Another lawmaker, Mustafa Nayyem, said the armed men attacked and beat him when he tried to enter the building to inquire about the occupation.
The occupation came days after armed men also suspected of acting on Kolomoyskiy's orders briefly occupied the headquarters of Ukrnafta's pipeline management subsidiary, Ukrtransnafta.
On March 19, Kolomoyskiy went to the office of Ukrtransnafta after the company's supervisory board replaced its chief, Oleksandr Lazorko, a Kolomoyskiy associate.
At one point, Kolomoyskiy told reporters he was protecting the building from "Russian saboteurs."
The government said there was no attempted sabotage.
Poroshenko has ordered all private battalions to be integrated with the official armed forces.
In a pointed warning to Kolomoyskiy, Poroshenko told a meeting of military commanders on March 23 that "none of the governors will have their private armed forces."
Kolomoyskiy has interests in energy, media, aviation and metals.
Lawmaker Borys Fliatov said on Facebook that a deputy governor of Dnipropetrovsk, Hennadiy Korban, resigned after Kolomoyskiy's dismissal.
Poroshenko named Valentin Reznichenko as acting governor of Dnipropetrovsk, the statement on his website said.
With reporting by AFP and TASS