Ukraine will settle nonperforming loans, which will help to attract private investment.

The National Bank of Ukraine and the IFC signed an agreement to create an infrastructure for resolving nonperforming loans (NPL) in the Ukrainian banking system. The agreement envisages the creation of a legal framework for NPL settlement companies.

There are currently no such companies in Ukraine’s financial sector. These new companies are expected to play an important role in managing NPLs and attracting private investment. By effectively resolving NPLs, these companies can help reduce the total number of NPLs, strengthening the banking sector’s resilience.

Partnering with these companies will help reduce risks for banks and other financial institutions, allowing them to continue to expand lending. The partner under the agreement is the Facility for Investment Climate Advisory Services (FIAS).

As of September 1 2024, the share of NPLs in the banking system was 33.1%, or ₴415B.