EBRD, PrivatBank launch partial debt write-off mechanism for war-affected businesses
The European Bank for Reconstruction and Development (EBRD), together with PrivatBank, is launching a EUR 6.8 million pilot mechanism to partially write off debt owed by Ukrainian businesses if assets financed with loan proceeds are damaged as a result of hostilities, the state-owned bank’s press service reported.
The new donor mechanism, called the Enterprise Security Enhancement (ESE), is integrated into the EBRD’s portfolio risk-sharing programs. It allows partner banks to partially write off borrowers’ debt if fixed assets purchased with loan funds are directly damaged by the war.
"This mechanism is very important for Ukrainian business, as it will make it possible to continue operations and reinvest funds," PrivatBank CEO Mikael Björknert was quoted as saying. According to him, despite shelling and destruction of property, companies continue to invest in recovery: in 2025, 40% of loan applications to PrivatBank were for investment purposes.
The bank said that under standard lending conditions, Ukrainian companies remain fully responsible for servicing loans even if financed assets are destroyed due to the war, while the limited availability of war-risk insurance restrains capital investment.
The ESE mechanism will apply only to loans financing capital investments aimed at acquiring fixed assets that were subsequently damaged by the war. It does not cover working capital financing. The program will operate alongside other insurance and support mechanisms but will be applied only in cases where no other sources of compensation are available. Minimum damage thresholds and compensation limits at the level of individual projects are also envisaged.
Before compensation payments are made, each application under ESE will undergo review and verification by EBRD partner financial institutions in cooperation with the bank or external consultants.
The pilot ESE mechanism is being launched under the EBRD’s portfolio risk-sharing program with PrivatBank, approved in 2025, with initial funding provided by the EBRD Shareholder Special Fund. Going forward, the mechanism is expected to be extended to other Ukrainian partner banks and risk-sharing programs. Further financing is anticipated from international donors, including the European Commission under the investment component of the Ukraine Investment Framework.
According to the EBRD, PrivatBank serves about 60% of Ukrainian entrepreneurs, has more than 930,000 active clients in the MSME segment, and over 40% of all Ukrainian businesses hold active accounts with the bank.
PrivatBank is Ukraine’s largest state-owned bank. As of March 1, 2026, its total assets amounted to UAH 963.77 billion, representing 23.0% of the system’s total, according to National Bank data.