PROBLEMS OF FOREIGN CAPITAL BANKS IN THE CONDITIONS OF WARTIME CHALLENGES

Abstract

The article examines the peculiarities of the functioning of banks with foreign capital under the conditions of war challenges, with particular attention paid to the specifics of their operations in Ukraine during the ongoing military conflict. The paper analyzes the current state of the banking system, defines the role of foreign capital in ensuring financial stability, and outlines the key problems of its functioning. Among the main challenges identified are the outflow of deposits, the increase in the share of non-performing loans, currency risks, infrastructure destruction, cyber threats, and the reduction of investment activity by parent companies. The research also emphasizes the importance of maintaining client trust and liquidity in times of uncertainty, while addressing the operational difficulties related to staff relocation and risk management. Special attention is devoted to the international experience of countries that have faced armed conflicts (Georgia, Croatia, Israel), with a focus on the stabilizing role of international financial institutions such as the IMF and the EBRD, the restructuring of banking systems, and the implementation of digital innovations, including cyber protection and remote banking services. The comparative analysis of these case studies allows the identification of practical instruments that may be applied in the Ukrainian context. The results of the study demonstrate that despite numerous threats, foreign-owned banks in Ukraine remain an important source of financial resilience, technological modernization, and integration into global markets. The paper argues that strengthening cooperation with international partners, developing state guarantees for foreign banks, improving risk management frameworks, and fostering digital transformation are essential for enhancing stability. The scientific novelty of the article lies in the comprehensive analysis of the activities of banks with foreign capital in the specific conditions of wartime Ukraine, which has not yet been sufficiently studied in the academic literature. The practical significance is associated with providing recommendations for policymakers, regulators, and banking institutions on how to strengthen the role of foreign capital in the post-war recovery and European integration of Ukraine. This study is aimed at researchers, financial analysts, and decision-makers who seek to understand the challenges and opportunities for the sustainable development of the Ukrainian banking sector in times of war and post-war reconstruction.