About the operation of foreign banks during the war and their role in the post-war recovery of Ukraine's economy

Vitalii Kucher, Board Member, Chief Financial Officer at Credit Agricole has taken part in the "Vision of Ukraine 2030" forum. He spoke about the operation of foreign banks during the war and their role in the post-war recovery of Ukraine's economy. We express our gratitude to all the guests and @Association of Ukrainian Banks for organization of the event. And here are short theses of the speaker’s speech for those who could not attend the forum:

1) At Credit Agricole we are in a state of constant adaptation: we ensure continuous operation, availability of electricity and communications, counter cyber threats, protect data centers, create backups in the cloud and are working every day in the interest of our customers. During the war, we have extended the delegation practice (heads of outlets have received more powers), we develop new products, specifically in the energy sector, we did not stop investing in digital solutions and development of customer applications. Like all other market participants, we experience a severe labor shortage due to the war, increased mobilization and the demographic situation in the country.

2) The environment in which we operate. We do not live in a vacuum; we are the economy participant that redistributes financial resources to create new value. Accordingly, banks are quite sensitive to the state of the economy and the real sector and, as a rule, are developing in accordance with the needs of the economy. This time, banks can play a different role ‒ the role of a driver, namely to establish mechanisms for attracting resources and finance the country's recovery.

The size of the banking system by assets is EUR 70 billion, including the amount of issued loans, that constitutes only a third of this amount - 24 billion. This is an unbalanced mix, which is dictated by the lack of demand and risk policies. The amount of capital is less than EUR 10 billion. For recovery, EUR 400-500 billion and 40 billion of capital are required, that is, it should be increased at least 5-7 times.

3) What conclusion to draw? The banking system of Ukraine does not have enough capacity to finance the reconstruction on its own, thus, we need significant investments. Foreign banks can act as a bridge between international financial institutions and governments of other countries (it is about direct financing, risk sharing and risk insurance, trade financing). Also, banks can attract additional capital from parent companies or new investors (in fact, in this phase of the war, capital increase is unlikely) and organize image events to attract private capital, but at the same time it is necessary to take into account the security risk.

4) Credit Agricole decided to keep all the revenues of the bank during the war in Ukraine and prepare for the reconstruction process now (energy sector, agribusiness, IT). Moreover, we are working with international financial institutions on risk sharing mechanisms and direct financing of targeted projects. We plan to extend, return to a normal mix of assets and continue supporting Ukraine and society.