People’s lending in Ukraine during the war

Alyona Shevtsova
4 min readSep 23, 2022


With the beginning of the war, banks experienced an increase in the proportion of non-working loans due to several problems. The main reason is that a large percentage of the population lost their jobs or their wages were reduced. The second aspect has to do with mortgage payments and the loss of collateral as a result of hostilities. According to the NBU, the share of non-performing loans was about 30% at the beginning of August. However, the government has prohibited charging penalties on overdue payments during martial law. In this blog, I will look at what banks will do to get loan money and how people will pay their mortgages in case of home destruction.

Bad loans have become a topical issue for all banks on the background of decreasing incomes of citizens. What should a person do if there is no opportunity to repay the loan? It is necessary to understand that banks are interested in repayment of the loan no less than debtors. That is why in most cases it is better for both sides to agree on a restructuring. Every bank has its own approach in this matter, but from the banks’ point of view — a loan that is paid off longer and in smaller amounts is much better than one that is not paid at all.

For the period of martial law and 30 days after that, credit vacations were introduced, during which it is forbidden to charge Ukrainians with penalties and fines on loans. It should be noted that the body of the loan and interest must be paid in full. This once again confirms the possibility of achieving favorable conditions for debt restructuring. War is a factor considered force majeure, so borrowers are unlikely to be held liable for failure to pay a loan. However, no war will last forever and after the war, the debts will have to be repaid with the corresponding withdrawal of the bank in the credit history.

The government made sure that during wartime, loans would continue to be affordable to the people, so it supports the work of the “5–7–9” program. In this case, the government is the main funding source because it compensates the banks for the difference between the market and preferential rates. Of course, the decision to approve or refuse a loan is made by the bank, because all the risks are borne specifically by it. This means that people with a bad credit history will probably not get a loan. Each bank will have its own specific requirements for applicants for loan money.

The structure of credit agreements from February 24, 2022, on the program “5–7–9” according to the “Entrepreneurship Development Fund

Borrowers whose property was damaged or destroyed as a result of hostilities can expect compensation from the state. The relevant draft law has already been adopted as a basis, and there is no reason to believe that it will not be fully approved. Such a procedure will work only for people’s lending and will have two possible options: full debt write-off and freezing of debts.

The first option, when the loan is fully written off, is possible under certain conditions:

  • the only housing destroyed as a result of military action, with an apartment not exceeding 140 sq’m and a house of 250 sq’m;
  • the only car with engine capacity up to 2,500 cm is destroyed;
  • the borrower has no debts as of February 23.

The second option — the freezing of the loan, will be due to several factors:

  • the property was destroyed or damaged as a result of the Russian Federation’s aggression;
  • the real estate is located in occupied territory or in places of military operations;
  • the property is located in the lands occupied before February 24.

Obviously, banks under such conditions will be compensated for certain losses they have incurred as a result of hundreds of thousands of potential outstanding loans. Forbes has calculated that at the moment, Ukraine will need $8 billion to restore the banking infrastructure and cover credit losses. Because of the hostilities, many banks by the end of 2022 will be unprofitable, or at least close to zero profit. Of course, the National Bank will soften the possible effects and many steps have already been taken to stabilize the banking system. For example, a full guarantee on deposits, restrictions on cash withdrawals, and narrowing the list of reasons for declaring a bank insolvent. However, it is difficult to predict what the trends in the banking sector will be when the war ends. In all likelihood, banks will subsequently experience a shortage of funds, which may entail bankruptcy risks. How real these risks will be depended only on the level of losses and the banks’ ability to rebuild their capital.



Alyona Shevtsova

CEO of the international payment system LEO, the shareholder of IBOX Bank