More than eighteen months since the onset of Russia’s full-scale invasion, the Ukrainian economy is in significantly better health than many would have dared imagine on the terrible morning of February 24, 2022. While the war unleashed by Russia has caused barely imaginable disruption to almost every aspect of daily life, Ukrainian businesses have demonstrated remarkable versatility, and in many cases are now looking to adapt to new realities and develop ties with neighboring EU countries. Larysa Bondarieva, the Deputy Chairman of Raiffeisen Bank Ukraine, says this success owes much to the solid financial foundations created by sweeping Ukrainian banking sector reforms implemented since 2014. She believes her bank’s comprehensive connections throughout Central and Eastern Europe can play a key role in building business bridges between Ukraine and the EU as part of the country’s broader European integration process.
No Ukrainian will ever forget where they were or what they were doing during the traumatic first few hours of the Russian invasion in late February 2022. Bondarieva recalls how she and her Raiffeisen colleagues held their first crisis meeting online at 5:45am as the enormity of the situation slowly dawned on the waking nation. By 8am, the bank had issued its first official statement to customers.
Looking back, Bondarieva says the following two months “were just one long day” of endless improvisation as the bank worked in remarkably challenging conditions to make sure its nationwide network of staff were safe while providing critical support to clients. Even in those dramatic early wartime days, there were already indications of the resilience that would come to define Ukraine’s response to the Russian invasion. “There was a strong sense of responsibility and solidarity among all our colleagues at the bank,” recalls Bondarieva. “With so many of us moving our families to safety and experiencing limited connectivity as we traveled across Ukraine or entered the EU, there was always somebody ready to step in and make sure there was no disruption to the bank’s core operations.”
She remembers being particularly impressed by the way the Ukrainian business community mobilized during the dramatic first weeks of the invasion when Kyiv itself was semi-encircled. Bondarieva recounts how agribusiness owners in the Kyiv region defied the advancing Russian army to club together and source the necessary equipment and supplies for the sowing season. “It was amazing to see how well-organized and proactive individual Ukrainian businesses were,” she notes. “There was no thought for any kind of competition; everyone was entirely focused on the goal of helping the country survive and making sure the agricultural sector survived.”
Following the initial shock of the invasion, Raiffeisen identified agriculture, food, fuel, and pharmaceuticals as the four key focuses for financing. The bank was able to retain its position as the leading lender in the strategically and economically critical agriculture sector in 2022 with an almost 20% market share, and was able to build on this during the first six months of 2023 to surpass the previous year’s annual lending total. This positive trend reflects the strength and appetite of the sector as Ukrainian agribusinesses adapt to the wartime economy, says Bondarieva. She notes that Raiffeisen is ready to do even more to finance Ukraine’s economic recovery.
As she surveys the Ukrainian economic landscape after one-and-a-half-years of Russia’s full-scale invasion, Bondarieva is generous in her praise for the role played by the National Bank of Ukraine. The country’s banking system underwent far-reaching reform in the wake of Ukraine’s 2014 Euromaidan Revolution, with dozens of banks shut down and the entire regulatory framework radically upgraded. Bondarieva believes the Ukrainian banking industry’s strong performance over past eighteen months reflects the reforms of the previous eight years and correct wartime management. “We have really seen the benefits of the reform agenda,” she says. “Nobody ever imagined we would have to prove ourselves in such conditions, but there is no doubt that the strength of the Ukrainian banking system was a huge positive for the Ukrainian economy during this incredibly difficult period for the country.”
Amid mounting signs of economic stabilization, Raiffeisen has expanded its existing risk-sharing programs with international financial institutions in order to offer greater financing opportunities to Ukrainian businesses, particularly those operating closer to the front lines in southern and eastern Ukraine. Another recent landmark for the bank was the launch of financing in Polish Zloty, which is designed to help Ukrainian companies expanding into Poland mitigate the risks posed by currency exchange rate fluctuations. The introduction of Zloty financing reflects Poland’s status as a hub for Ukraine’s large refugee community and a key market for Ukrainian exporters, says Bondarieva. She sees it as a logical step and part of the bank’s efforts to meet the evolving appetites of the Ukrainian business community.
The launch of Polish currency financing may well be a sign of things to come for Raiffeisen Bank Ukraine. In June 2022, Ukraine secured official EU candidate nation status, bringing the country significantly closer to its long-term strategic goal of European Union membership. Bondarieva is convinced that Raiffeisen’s extensive presence in Eastern and Central Europe, along with the bank’s well-developed connections throughout the business communities of the region, make it well positioned to support Ukraine’s further European integration. She says the bank has already begun working with Ukrainian customers to identify potential partners inside the EU via the Raiffeisen network, and envisages huge scope to expand this role. “We have a strong presence in both Ukraine and the EU, so the bank is ideally placed to help facilitate integration and greater cooperation. In the postwar period, I see this becoming one of our core activities.”
The process of integration will be a two-way street, of course, with many European businesses seeking to participate in what already promises to be a highly ambitious drive to rebuild Ukraine. Bondarieva predicts that investor attention during the anticipated future recovery process will focus primarily on agriculture, energy, and infrastructure, with western Ukraine likely to emerge as a major beneficiary as Ukrainian businesses and international partners look to establish hubs for manufacturing and transportation close to the EU border. “I expect international interest in Ukrainian farming and food processing to surge. Green energy opportunities will also generate a lot of attention as part of a generational overhaul of Ukraine’s outdated and battered power grid. We are already witnessing growing investment in logistics and storage facilities; this will inevitably continue.”
Bondarieva says Raiffeisen is already preparing the ground for the postwar period and is engaging with the wider European business community via the bank’s international network. She notes recent workshops with Raiffeisen colleagues from the Czech Republic and Romania and expects this process to accelerate, dependent on the security situation in the country. “We are not yet talking about immediate readiness to invest but we are seeing genuine preparations,” she says. “We are confident that we have the expertise, local knowledge, and financial capacity that investors will be looking for.”
About the interviewee: Larysa Bondarieva is Deputy Chairman of Raiffeisen Bank Ukraine.