Ukraine’s PrivatBank Launches Corporate Business Loans – Alarms Banking Sector

Since its inception, PrivatBank has provided relatively small-scale financial services, focusing on card facilities for individuals and loans to small and medium-sized enterprises. Now it is expanding its business to the provision of credits for larger enterprises.

Dmytro Musiyenko, the member of the Board responsible for retail business, announced it during the presentation of an integrated report on the bank’s results on Thursday, May 30.

This is a major shift within Ukraine’s banking sector, as corporate banks will now face a rival that has less experience in the area but has sufficient resources to fill companies with cash. 

“They are hiring professionals for its corporate loans department, and everyone is getting nervous about this, though it’s just a part of the normal competition,” one of the managers of Ukraine’s state-owned bank told Kyiv Post. “They have enough resources to fund the sector very fast.”

PrivatBank has enormous reserves, its business made up almost a half, 45 percent, of the total net revenues of Ukraine’s 2023 banking sector, according to the central bank’s statistics. It has 18.4 million active clients – equivalent to the total population of the Netherlands. 

PrivatBank’s net revenues for the first four months of 2024 already exceed the net incomes of the 14 Western subsidiaries in Ukraine, according to Ukraine’s National Bank. It earned Hr.13.9 billion ($346.4 million) after taxes, compared with Hr.10.2 billion ($254.7 million) in the others. 

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Old Legacy and New Chapter

PrivatBank chose Yevhen Kulikov to lead the corporate loan division, having appointed him five months ago. Previously, he worked for 20 years for UkrSibBank in Kryvyi Rih and Kyiv, according to his LinkedIn profile.

A Kyiv Post source in one of Ukraine's other private banks said that Ievgen Zaigraiev might also assist in the process, as he is credited with building a corporate loan business for ProCredit Holding from scratch and also worked in Eurobank and PKO Bank Polski.

PrivatBank has never actually stopped providing loans – but there are those the institution would rather forget. 

“Gross corporate loan portfolio is estimated at Hr. 750 billion ($20 billion), PrivatBank holds one-quarter of it – Hr. 200 billion ($5 billion). So, PrivatBank’s launched its corporate loan business with the status of a leader already,” ICU financial analyst Mykhailo Demkiv told Kyiv Post. 

Of these loans, Hr.25 billion ($670 million), were given to small and medium-sized enterprises – but almost Hr.170 billion ($4.4 billion) of loans belong to enterprises created by its previous owners: Ukrainian oligarchs Ihor Kolomoisky and Hennadiy Boholiubov. The latter is responsible for the bank's portfolio of non-performing loans.

But over the last 10 years, PrivatBank took 70 percent of the Ukrainian acquisitions market, the bank’s press secretary Oleh Serha told Kyiv Post.

The bank provided these services to all kinds of businesses, though its loans were focused only on SMEs (small and medium-sized enterprises). This helped the management to study enterprises and gain experience, skills and people, Serha added. 

Find a Way

“Starting from the 2008 crisis, the ratio of gross corporate loans to Ukraine’s GPD is falling. Even the full-scale invasion hasn’t contributed to the fall much,” Demkiv told Kyiv Post, pointing to the complexity of the tasks PrivatBank is trying to address. 

The ratio peaked in 2008-09 at 80 percent of GDP, but in 2016 it was estimated at 40 percent, falling to less than 20 percent after 2021 and never rising back, according to Demkiv.

The bank’s team, on the other hand, is more assertive and aims to offer credit to agricultural business, retail and production first, Serha said, adding that “The demand from large businesses never stops.” 

In agriculture, the bank is interested in finding clients in the areas of production, logistics and finished products. Potential clients from production should aim for export and adopt up-to-date standards.

Though not everyone is scared or skeptical about the launch.

“I am not surprised they decided to launch corporate lending – I am surprised they haven’t announced it earlier,” a Kyiv Post source from one of Ukraine's private banks said.