Review of the banking sector of Ukraine during martial law

Abstract

Russia's full-scale attack on Ukraine provoked an increase in internal and external risks, both for the country's economy as a whole and for the financial sector in particular. This has become a key challenge for our state, because it is the stable operation of the financial system that provides the necessary resources for victory. An important component of the financial sector is the domestic banking system, which with the beginning of hostilities on the territory of Ukraine has experienced significant shocks and functions in a regime of stress and uncertainty. At the same time, banks continue their activities, trying to fulfill all their obligations and comply with the norms established by the NBU. However, it is obvious that certain transformations are taking place in the banking sector. The banking system is forced to quickly adapt to functioning in the conditions of martial law, acting as a reliable pillar of the financial defense of Ukraine The paper discusses the features of the banking sector of Ukraine and the functioning of domestic banks under martial law. The changes that have taken place in the structure of the banking sector and banking infrastructure during martial law are determined. The key tendencies of the banking market during the war have been studied. The attention is focused on the issues of managing the credit risks of banks in the conditions of stress and uncertainty caused by the war and their ability to normalize their financial performance in the foreseeable future and take stabilization measures. The key principles and instruments of financial support for banks by the regulator have been identified. That is, the main elements of the policy of regulatory easing of the NBU regarding the activities of domestic banks in wartime conditions are outlined.