Businesses that have suffered losses due to the war will have some of their debts written off
8 May 18:56
The European Bank for Reconstruction and Development, together with PrivatBank and Raiffeisen Bank Ukraine, is launching a pilot project to provide partial debt relief for businesses affected by the war. This is stated in an EBRD press release, as reported by "Komersant Ukrainian".
“The ESE pilot project is being launched as part of the EBRD’s PRS programs with PrivatBank and RBU, approved in 2025. It will be limited in scope, with allocations of €6.8 million and €1.2 million, respectively,” the statement reads.
As explained in the statement, ESE introduces a structured mechanism that allows EBRD partner banks to provide partial debt forgiveness to eligible sub-borrowers if assets financed through sub-loans covered by the EBRD’s PRS line have suffered direct, verified losses as a result of the war.
“Thanks to donor support, the EBRD will compensate partner banks for credit losses incurred, which will allow Ukrainian enterprises to continue operations and reinvest, rather than bear full residual liability for destroyed assets.”
The EBRD explained that, under standard loan agreements, Ukrainian enterprises remain fully liable for repaying their loans, even if the assets financed by these loans are destroyed as a result of the war. Given the limited availability of war risk insurance, this mismatch has hindered the capital investments needed by Ukraine’s economy to sustain operations, preserve jobs, and rebuild.
“The ESE maintains an incentive for Ukrainian enterprises and households to invest in long-term capital expenditures (capex) despite the prolonged uncertainty of wartime, helping to sustain livelihoods and Ukraine’s economic resilience. It operates alongside existing market-based and donor-funded insurance mechanisms but does not duplicate them, with strict rules to prevent double compensation, ensuring that it is used only where no other recourse exists.”
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This mechanism is available exclusively for sub-loans for capital expenditures financing fixed assets that have suffered direct war-related damage.
Each claim for compensation for direct war-related losses will be reviewed and verified by EBRD partner banks in cooperation with the EBRD (or its appointed advisors) prior to any compensation payment. Compensation for direct losses does not cover working capital, and minimum loss thresholds and aggregate limits per project will apply to ensure the mechanism’s focus and financial discipline.
In the future, the program is planned to be expanded with the participation of international donors
According to the EBRD’s statement, the state-owned PrivatBank is the largest systemically important bank in Ukraine. It focuses on retail customers as well as micro, small, and medium-sized business clients, serving over 18 million individuals and more than 910,000 business clients across more than 1,100 branches. Over 70 percent of Ukrainians use its services.
Raiffeisen Bank Ukraine is the country’s largest private bank and the fourth-largest overall. It has 306 branches, serves 2.52 million active customers, and offers traditional banking products to corporate, small, and medium-sized enterprises, as well as retail customers. The EBRD has a long-standing and successful relationship with Raiffeisen Bank Ukraine dating back to 1998.
The EBRD is the largest institutional investor in Ukraine and has significantly increased its investments in the country since the start of Russia’s full-scale invasion in 2022. Since the start of the war, the Bank has allocated €9.7 billion to support the real economy, focusing on energy security, private sector resilience, and critical infrastructure.
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