It may not quite be business as usual at PrivatBank – but Gerhard Boesch, chief executive of Ukraine’s largest lender, confirms that digital banking services are still up and running, many of its ATMs have cash, and branches are open even in cities at the centre of Russian attacks.
Speaking from western Ukraine, Boesch says the country’s banking sector is “surprisingly well-functioning”.
“All online services are working in most banks,” he says. “Certainly, at PrivatBank you can still transfer money, receive salaries and pay online in shops.”
At the same time, he stresses that ensuring access to cash is also key.
“Not everyone is online in a country like Ukraine, so we are trying to fill as many ATMs as possible,” he says.
On average, around half of PrivatBank’s ATMs are still being refilled daily, but unsurprisingly there is substantial regional variation.
“In the western part it’s close to 100%, but of course in Mariupol, Kharkiv and Sumy the figure is much lower,” says Boesch. “And also now in Kyiv, unfortunately.”
PrivatBank is also keeping branches open wherever possible, with a couple of locations still open even in Kharkiv and Kyiv as of Tuesday.
Boesch is conscious that, with 20 million customers, PrivatBank is a critical part of Ukraine’s financial infrastructure – something the bank’s management has been stressing to staff keen to take up arms in the conflict.
The impact for the country is bigger if [our people] stay and work in the bank, especially in critical functions, than the impact they would have if they start fighting with Kalashnikovs
“We are trying to explain to our people that the impact for the country is bigger if they stay and work in the bank, especially in critical functions, than the impact they would have if they start fighting with Kalashnikovs,” he says.
PrivatBank also has by far the largest staff of any bank in Ukraine, with 20,000 employees. The bank is supporting its workforce wherever possible, but does not have the logistics or capacity to organize mass evacuations, given the transportation challenges in Ukraine.
“People who wanted to leave when the fighting started probably did that on their own initiative,” he says. “What we can do is support them financially, and we are also organizing networks of people offering shelter, housing or at least places where they can sleep in western Ukraine.”
He also notes that, for many, leaving is not an option.
“For many people it probably means losing everything they had,” he says. “That’s not an easy decision. Others have family members and parents who can’t or won’t move.”
Logistical challenges
Whether Ukraine’s banking sector will be able to maintain its resilience as the Russian invasion escalates remains to be seen. As Boesch notes, the infrastructure for keeping banking services going remotely is well-developed after two years of Covid.
At the same time, banks will clearly face logistical challenges. PrivatBank on Tuesday put out an appeal to the international community for cash transportation vehicles, after a chunk of its fleet either became inaccessible or was requisitioned by Ukrainian military organizations and the police.
“This is something we would be very grateful for help with,” says Boesch. “Currently, it’s not yet critical and we’re able to get cash to our branches and ATMs, but if the trend continues and the number of vehicles continues to shrink, then it could be a problem.
“This is not just a problem for PrivatBank. I hear from other banks that they are facing the same thing.”
We’ve never seen anything like [the DDoS attack]. We’ve never even heard of anything like it. The intensity was incredible – we were getting millions of requests per minute
Other challenges facing Ukraine’s largest banks include the prospect of renewed cyberattacks. Before the invasion, PrivatBank and number-two player Oschadbank were the subject of a massive distributed denial-of-service (DDoS) attack.
“We’ve never seen anything like that,” says Boesch. “We’ve never even heard of anything like it. The intensity was incredible – we were getting millions of requests per minute. It was clear that nobody outside China, the US and Russia had the capacity for such an attack.”
Fortunately, PrivatBank’s tech team, which is known for being one of the most sophisticated in Ukraine, was able to contain the attack within an hour and a half.
Overall, Boesch reports that morale in the bank is still high. “Our team is very positive,” he says. “We know that Ukraine and Ukrainians will continue to fight.”
Price to pay
As a long-term resident of Ukraine – he spent 15 years at Raiffeisen’s local subsidiary before taking over at PrivatBank in June – Boesch is unsurprised by the country’s response to Russian aggression. He is worried, however, by the price it might have to pay.
“What has happened in the last 24 hours, this is really the worst case short of a nuclear war,” he says. “Attacking apartment buildings and civilian infrastructure with weapons designed to inflict mass destruction – I think all bridges have now been burned.
“If this continues to escalate, we could be talking about tens of thousands of civilians dead. It’s unbelievable.”
At the same time, he is heartened by the transformation Ukraine’s image in the eyes of world has undergone in barely a week – from impoverished post-Soviet basket case to celebrated defenders of democracy.
“Today, Ukraine is officially a candidate for EU accession,” he says. “We just need to survive and then there’s no way back. I think everyone finally understands that Ukrainians are fighting not just for Ukraine, but for Europe. We tried to tell people that back in 2014 but no one listened. Now everyone is listening.”
