PROJECT FINANCE IN BANKS: INSTITUTIONAL TRUST, RISK MANAGEMENT AND STRATEGIC READINESS TO FINANCE UKRAINE’S RECOVERY

Abstract

The article examines project finance in banks as a mechanism for mobilising long-term capital for the reconstruction and modernisation of the Ukrainian economy. The relevance of the topic is determined by the need to finance capital-intensive infrastructure, energy, industrial and municipal projects under conditions of elevated country risk, limited public resources and increasing expectations of international investors. The purpose of the article is to substantiate the role of banks in structuring project finance transactions and to define the institutional, risk-management and analytical prerequisites that make a bank capable of attracting and channelling long-term project capital. The methodological basis of the study includes analysis and synthesis, comparative analysis, systematisation, logical generalisation, risk-oriented analysis and the modelling of an institutional readiness framework for banks. The article argues that project finance should not be viewed only as a form of lending secured by a future asset. It is a complex bank-management process in which the quality of corporate governance, transparency, project risk allocation, documentation, cash-flow control, environmental and social risk assessment, cooperation with international financial institutions and the internal capacity of bank teams become decisive. The study systematises the specific features of specialised lending exposures, including the shift from the assessment of an existing borrower to the assessment of projected cash flows and project implementation risks. It also identifies the main gaps that may limit banks’ access to long-term funding: insufficiently visible governance structures, weak formalisation of risk responsibilities, incomplete disclosure, limited sector expertise and lack of investor-ready documentation. The article proposes a conceptual model of bank readiness for project finance based on five interconnected blocks: governance, risk management, project analytics, investor transparency and partnership capacity. The practical value of the article lies in the proposed approach to preparing banks for participation in project finance transactions, especially in reconstruction-related projects where international lenders, guarantors, insurers and development institutions require higher standards of transparency and risk control.