Ukraine’s Banks Say They are Weathering the War ‘Surprisingly Well,’ For Now
More than three months into a war that has ravaged Ukraine and its economy, the country’s banks are holding up, the head of the country’s banking association said. “The economy is going through a shock contraction,” Olena Korobkova, chair of the board at the Independent Association of the Banks of Ukraine, said Thursday. But, she said, compared with what has happened in other conflicts, the banking situation in Ukraine is good. “The banking system is working, which is good news,” she said.
Vitaliy Vavryshchuk, the head of macroeconomic research at ICU, a Ukrainian investment bank, said that banks learned lessons after the 2014 crisis, when tensions with Russia spiked. When the war started, Vavryshchuk said, Ukrainians initially rushed to take out their savings, but they were reassured about payments and withdrawals. Because of reforms enacted before the war and in response to the coronavirus pandemic, Korobkova said, a large share of banking activity takes place online, allowing Ukrainians to open a bank account at home without “risking your life. Still, in the country’s east, many businesses require payment in cash because of power cuts and because war has made working off the books much easier.
Recently, Ukraine has been forced to take tough steps to keep its economy afloat. Vavryshchuk said that he still expected the banks to endure significant losses, because companies have lost a lot of business, and many will be unable to repay their loans.
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