GIT username ignored when VCS checkout mode on agent (2017.2.1)

Hi,

We have following settings (TC 2017.2.1):

VCS checkout mode: Always checkout files on agent

VCS Root: devops@cvssrv.tatrabanka.sk:/home/git5921/tcdevops.git

Authentication method: Default Private Key,

Username: devops

Both agent and server are on the same machine and are running under the same OS user named: buildadm.

When we upgraded for version 10.0, we are unable to connect to git. Looks like agent is ignoring authentication method.

teamcity-vcs.log:

[2017-12-29 15:32:30,043] INFO - jetbrains.buildServer.VCS - Git version: 1.8.3.1
[2017-12-29 15:32:30,044] INFO - jetbrains.buildServer.VCS - [/data/TeamCity-2017.2/buildAgent2/system/git/git-4CE95842.git]: /usr/bin/git init --bare
[2017-12-29 15:32:30,062] INFO - jetbrains.buildServer.VCS - [/data/TeamCity-2017.2/buildAgent2/system/git/git-4CE95842.git]: /usr/bin/git show-ref refs/heads/master
[2017-12-29 15:32:30,075] WARN - jetbrains.buildServer.VCS - '/usr/bin/git show-ref refs/heads/master' command failed.
exit code: 1
[2017-12-29 15:32:30,075] INFO - jetbrains.buildServer.VCS - [/data/TeamCity-2017.2/buildAgent2/system/git/git-4CE95842.git]: /usr/bin/git fetch --progress origin +refs/heads/master:refs/heads/master
[2017-12-29 15:33:57,089] WARN - jetbrains.buildServer.VCS - '/usr/bin/git fetch --progress origin +refs/heads/master:refs/heads/master' command failed.
exit code: -1
stderr: Kerberos username [buildadm]:
exception: java.lang.InterruptedException

Any ideas?