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Reimagining European Capital Markets - From Fragmentation to Harmonization

Europe has the chance to reposition itself as an attractive destination for investment and innovation even as it grapples with geopolitical uncertainty and macroeconomic volatility.The region’s capital markets infrastructure consists of an array of often unconnected trading venues, clearing houses, settlement systems, central counterparties and data and technology providers – all of which are fragmented across the various countries in the region. This disjointedness has implications for capital formation, liquidity, costs and efficiency.This Citi GPS report identifies gaps in the infrastructure ecosystem and highlights steps to unlock an integrated capital market in Europe through harmonizing post-trade processes.

<hr>European capital markets suffer from significant fragmentation in post-trade processes, issuance and listings. 63% of our 4Q25 survey respondents cite significant gaps in regulation, policy, taxation and operational processes which need to be addressed. Only 7% believe most barriers to harmonization have been addressed.<hr>The capital market fragmentation in Europe has contributed to a capital formation gap. Between 2020 and 2025, the value of IPOs in EU was 0.6% as a percentage of GDP compared with 2.1% for the U.S.1,2 The proportion of European IPOs listing in the U.S. has tripled since 2015 to 22% of all IPOs by European companies by value3.<hr>50% of respondents cite the high number of financial market infrastructures (FMIs) in Europe as a key factor driving capital markets fragmentation creating complexity and reinforcing national laws instead of a single market. Reducing the number of central securities depositories to fewer than 10 from 30+ today could bring price efficiency and help create a single market structure.<hr>43% of survey respondents cite legal and regulatory inconsistency as one of the primary drivers for capital markets fragmentation. The shift from divergent directives to consistent regulations, alongside eliminating redundant due diligence could potentially unlock billions of euros in annual investments and boost GDP by 1.5% over 10 years4.<hr>40% of survey respondents say that high and opaque cost structures contribute to the fragmentation of Europe’s capital markets, reflecting domestic monopolies and a lack ofcompetition. Average settlement costs are 30-300% higher and safekeeping costs 160-500% higher than in the U.S.<hr>Tokenization has a role to play in harmonization. About 36% of survey respondents agree that tokenization could boost efficiency via automated, real-time processes, better collateral mobility and liquidity, and unified data on shared ledgers.

Key Takeaways

1 AFME, Equity Primary Markets and Trading Report 4Q24 &amp; 3Q25, 10 December 2025 2 Renaissance Capital, 2025 IPO Market Stats, 26 December 2025 3 New Financial – Rethinking Capital Markets, A reality check on international listings, April 2025 4 CEPR, The Economic Impact of European Capital Market Integration, 22 September 2025

From Fragmentation to Harmonization 

This Citi GPS report identifies gaps in the infrastructure ecosystem and highlights steps to unlock an integrated capital market in Europe through harmonizing post-trade processes.

Reimagining European Capital Markets

Amy Thompson

<ul><li>Philanthropy is crucial for Ukraine's long-term recovery advocating a strategic shift from centralized aid to locally-led initiatives to build economic resilience and foster future prosperity</li><li>The strategic significance of this approach lies in empowering local non-profits and actors, ensuring more effective sustainable human recovery and maximizing philanthropic impact</li><li>Despite ongoing donor fatigue, critical next steps involve prioritizing strategic philanthropy, supporting local non-profits and addressing long-term recovery needs including economic opportunities and psychosocial support</li></ul>

The full-scale invasion of Ukraine in 2022 sparked an outpouring of philanthropy from across the globe with $1.6 billion pledged in just over six months.1 Although giving has slowed since then, philanthropy can help drive Ukraine’s human recovery – which we argued <a href="https://www.citigroup.com/global/insights/ukraines-recovery-the-private-sectors-role-and-three-hurdles-to-clear" target="_blank">in our note on the role of the private secto</a>r will underpin the country’s long-term economic resilience and future prosperity. &nbsp;To unlock its full potential, philanthropic capital must evolve. Long-term recovery will be best supported by a deliberate shift from centralized aid toward support for smaller, locally led non-profits working alongside civil society peers and government institutions. &nbsp;Citi Institute discussed the current status of giving to and in Ukraine and opportunities for strategic philanthropy in the recovery with Karen Kardos, Head of Philanthropic Advisory for Citi Wealth, Rachael Barber, Citi’s Director for International Community Relations who has responsibility for the UK, Europe, the Middle East and Africa, and Olga Lebedyeva who chairs the committee of Citi colleagues that disburses the firm’s charitable donations in Ukraine. &nbsp;<h2>Donors continue to support Ukraine’s resilience – but fatigue has set in &nbsp;</h2>Philanthropy has already made a huge contribution to Ukraine’s wartime resilience. Total grants and pledges have now reached $3.4 billion according to the latest data from Candid. This is about the same as all-cause giving in the Netherlands each year ($3.2bn)2 and equal to Ukraine’s recovery needs in both the Emergency Response &amp; Civil Protection and Justice &amp; Public Administration categories ($3.3bn) on the most recent estimates.3Individual donors whose contributions are not tracked in this data are also continuing to give to Ukraine after breaking records for the amount given in early 2022.4Domestically, polling shows that 85% of Ukrainians gave to charity in 2024 and many give monthly.5 Outside Ukraine, Kardos observes that the country is “still very much in the psyche of American donors”. Evaluators like Charity Navigator have continued to maintain lists of international non-profits working in Ukraine, signaling sustained engagement. &nbsp;But giving has clearly slowed. Ninety-four percent of the pledges tracked by Candid were made in 2022, and Kardos, Barber, and Lebedyeva all point to signs of “donor fatigue”. A higher level of giving often accompanies the early weeks and months of a disaster and tends to peter out as media coverage subsides and other global emergencies come to the fore. &nbsp;Economic pressures have compounded this effect. Lebedyeva highlights that domestic donations have been constrained by a cumulative rate of inflation of 63% since 2022, pushing many Ukranians below the poverty line. &nbsp;While donor fatigue is real, it does not diminish the importance of philanthropy in Ukraine’s recovery. Instead, it increases the need for funding to be deployed more strategically. &nbsp;<h2>Philanthropy can also contribute to Ukraine’s longer-term recovery &nbsp;</h2>Even as emergency funding subsides, the opportunity for impactful philanthropy in Ukraine extends well beyond the cessation of hostilities. Ukraine’s recovery requires rebuilding livelihoods, demining land, and addressing the collective trauma of living through war – each of these is an opportunity for donors.Barber focuses on the human component of recovery, highlighting how non-profits can help families access economic opportunities and generate an income as Ukraine rebuilds – for instance by supporting entrepreneurship or re-skilling workers. She anticipates that non-profits will also contribute to psychosocial support – like providing help with post-trauma mental health issues and enabling access to education. &nbsp;Lebedyeva notes that voluntary organizations will play a key role in meeting the needs of vulnerable groups. Both children and elderly people have lost caregivers as a result of the war, and this has created an urgent demand for social support services. Veteran reintegration is another critical priority. Lebedyeva says that “it's crucial to prepare society to welcome veterans.” In part this means pathways to employment to reintegrate veterans to civilian life, but public infrastructure will also need to become more accessible for people with injuries – lamentably including veterans and civilians.Our first note on Ukraine’s recovery argued that a resilient human recovery is not only a standalone challenge, but also a hurdle that must be cleared in order to encourge private sector investment. &nbsp;While the Ukrainian government will likely act on these issues when peace comes, Lebedyeva expects that volunteer movements and NGOs will remain vital to the recovery efforts. A report published by Chatham House in July 2025 agrees, arguing that the whole of ‘Team Ukraine’ – including civil society, the public sector, and citizens – must be mobilized for an effective recovery.6<h2>Funding should shift to local actors, for a more effective recovery &nbsp;</h2>As Ukraine’s needs evolve, so must philanthropic strategies. Experts in disaster philanthropy increasingly conclude that a locally led recovery is a more effective one.7 Barber underlines this: “While the early days of an emergency require a swift influx of capital, figuring out how to get grants to local actors is important for philanthropy to contribute to an effective longer-term recovery”. &nbsp;Local actors that could absorb philanthropic support now abound after extraordinary growth in Ukraine’s non-profit ecosystem. The number of non-profits in Ukraine has increased by 70% since 2022.8 “Ukrainians have shown great ingenuity, resilience, and a capacity for self-organization,” Lebedyeva notes, as demand for an engaged civil society has created supply. &nbsp;Yet funding has not followed this growth. One examination of the $10 billion in humanitarian funding tracked by the UN (which includes donations by international governments) found that only 1% of this sum has gone to Ukrainian civil society organizations.9 Chatham House reports that Ukrainian civil society organizations see this approach to philanthropy as “giving people fish, rather than a fishing rod”. &nbsp;Analysis of data from Candid – which tracks foundations, corporations, and affluent families, but excludes individual donors and governments – reinforces this picture. Since 2022, the share of philanthropic grants for Ukrainian non-profits has decreased, even as the number of such organizations has increased (Figure).10<h2>Majority of pledges go to international – rather than Ukrainian – organizations</h2>Giving to smaller or newer non-profits can be challenging, especially for institutional donors who are writing larger checks. These donors have high due diligence requirements, and their donations may be too large for smaller charities to absorb. However, these barriers are not insurmountable – collaboration between smaller non-profits with related missions could be part of the solution. Innovations are also emerging, like databases of pre-approved non-profits which have already met funders’ standard due diligence assessments.&nbsp;<h2>Looking Ahead</h2>Philanthropy has already played a meaningful role in supporting Ukraine through acute phases of the war. Now, it stands to contribute enormously to Ukraine’s recovery. Experience teaches that an efficient and durable recovery is one that is owned and led by local actors who are more aware of community needs and cultural nuances. Funding local actors has so far been challenging, but clearing this hurdle is vital if philanthropic donors are to maximize the value of their contribution to a resilient and prosperous Ukraine.<hr>[1] We described this in detail in our Citi GPS report Philanthropy and the Global Economy 2.0.[2] According to our analysis in Global Giving – <a href="https://www.citigroup.com/global/insights/global-giving">https://www.citigroup.com/global/insights/global-giving</a>[3] According to estimates in the World Bank’s RDNA 4 from February 2025 – <a href="https://documents1.worldbank.org/curated/en/099022025114040022/pdf/P180174-ca39eccd-ea67-4bd8-b537-ff73a675a0a8.pdf">https://documents1.worldbank.org/curated/en/099022025114040022/pdf/P180174-ca39eccd-ea67-4bd8-b537-ff73a675a0a8.pdf</a>[4] For example, the British public set a world record for the most raised in a single week for an online campaign with their donations to the Disaster Emergency Committee Ukraine Appeal in March 2023.[5] &nbsp;<a href="https://zagoriy.foundation/wp-content/uploads/2024/12/02_12_2_doslidzhennya_sektoru_blagodijnosti.pdf">https://zagoriy.foundation/wp-content/uploads/2024/12/02_12_2_doslidzhennya_sektoru_blagodijnosti.pdf</a>[6] &nbsp;<a href="https://www.chathamhouse.org/2025/07/mobilizing-team-ukraine-successful-recovery">https://www.chathamhouse.org/2025/07/mobilizing-team-ukraine-successful-recovery</a>[7]&nbsp; For instance, see Global Giving, 2021. ‘The Future of Disaster Philanthropy’. One reason is that local organizations are more cost-effective than international actors. See Refugee International, 2024. ‘Passing the Buck: The Economics of Localizing Aid in Ukraine’.[8]&nbsp; <a href="https://opendatabot.ua/en/analytics/non-profit-2023">https://opendatabot.ua/en/analytics/non-profit-2023</a>[9] Refugees International - ‘Annual Ukraine Localization Survey 2024’.[10] There are limitations to this analysis: first, data on giving is always patchwork so this picture is incomplete. Second, donations to International NGOs (INGOs) are not incompatible with a locally led recovery as INGOs often have local delivery partners.

Citi Institute discussed the current status of giving to and in Ukraine and opportunities for strategic philanthropy in the recovery with Karen Kardos, Head of Philanthropic Advisory for Citi Wealth, Rachael Barber, Citi’s Director for International Community Relations who has responsibility for the UK, Europe, the Middle East and Africa, and Olga Lebedyeva who chairs the committee of Citi colleagues that disburses the firm’s charitable donations in Ukraine. &nbsp;

Beyond Humanitarian Aid: Philanthropy Catalyzes Ukraine’s Recovery

Rebuilding Ukraine - The Role of Private Capital in Post-Conflict Recovery

The cost of Ukraine’s reconstruction is estimated at $588 billion over the next decade.1 This massive undertaking will require private capital alongside public funding, as international governments are unlikely to fully finance recovery.This Citi Institute report examines how private investment can contribute through foreign direct investment (FDI), venture capital, public-private partnerships and co-investment with international financial institutions (IFIs). We see three drivers of investment into Ukraine: EU integration and reforms, global defense spending priorities and demand for critical minerals.However, challenges remain including ongoing security risks, potential human capital shortages and the geographical mismatch between investment supply (favoring western Ukraine) and reconstruction demand (concentrated in eastern frontline regions).

<hr>1. Massive reconstruction cost: Ukraine needs $588 billion over 10 years – almost three times its 2025 GDP.2<hr>2. Top sectors damaged: Energy, transport, and housing each require approximately $90 billion in reconstruction funding.<hr>3. Private capital will find investable opportunities: While public funding will remain essential, many of Ukraine’s reconstruction needs can become bankable projects.<hr>4. FDI could reach $87-145 billion: Depending on reform progress and business confidence, our scenario analysis suggests that foreign direct investment could contribute 15-25% of needs.<hr>5. Defense and minerals: Ukraine’s defense innovation and critical raw materials are likely to play a key role in the country's reconstruction.<hr>6. IFIs mobilize additional capital: International financial institutions could attract €20-50 billion in private co-investment over a decade.3

1 World Bank Group, Ukraine: Fifth Rapid Damage and Needs Assessment (RDNA5)2 World Bank Group, Ukraine: Fifth Rapid Damage and Needs Assessment (RDNA5)&nbsp;3 Citi Institute analysis of American Chamber of Commerce in Ukraine, UNCTAD, Statista, Global Data

The Role of Private Capital in Post-Conflict Recovery

This Citi Institute report examines how private investment can contribute through foreign direct investment (FDI), venture capital, public-private partnerships and co-investment with international financial institutions (IFIs).

Rebuilding Ukraine 

Transcript

<ul><li>Ukraine has demonstrated strong economic resilience, with many companies recovering to or exceeding pre-war performance</li><li>The tech sector has grown into a $6.7 billion industry, driven by innovation including nationwide digital systems</li><li>Investor interest is rising, supported by Ukraine’s economic adaptability, workforce strength, and closer alignment with Western markets</li><li>Significant opportunities exist for private investment and public-private partnerships, particularly in energy, transport, and digital infrastructure</li></ul>

In this episode of Citi Institute podcast, host Alex Miller is joined by Alexander McWhorter, Citi Country Officer and Banking Head for Ukraine and Lenna Koszarny, Founding Partner and CEO of Horizon Capital.&nbsp;They explore Ukraine’s remarkable economic resilience during the war, with many companies rebounding to pre-war revenue levels and others continuing to expand.Alexander McWhorter highlights the strength of Ukraine’s economy, with GDP surpassing pre-war levels despite the ongoing conflict.Lenna Koszarny outlines the scale of investment needed for reconstruction, emphasizing the significant opportunity for both private and public capital to support Ukraine’s recovery and long-term growth.Together, they examine the opportunities ahead and the potential for sustained growth despite continued challenges. Citigroup (“Citi”) and Horizon Capital are not affiliated and are independent of each other. Horizon Capital maintains a client relationship with Citi through Citi Investment Banking. The speakers’ views are their own and may not necessarily reflect the views of Citi or any of its affiliates. All opinions are subject to change without notice. Neither the information provided nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. The expressions of opinion are not intended to be a forecast of future events or a guarantee of future results.

Alex McWhorter is the Citi Country Officer (CCO) and Corporate Bank Head for Ukraine. He is responsible for Citi's franchise in Ukraine including leading the business and protecting the franchise.Alex joined Citi in New York in 2003 in Market Risk Management, before moving to Corporate and Investment Banking in 2007 covering the Power sector. He served as a Director in the Risk CAO office for over three years where his responsibilities included leading coordination of Citi's CCAR efforts. Most recently before Ukraine, he served as UK Chief Risk Officer, and was responsible for the risk management of Citi's UK legal entities as well as supporting the EMEA CRO on regional support and crisis management.Alex holds a Masters of Business Arts in Management from New York University, Stern School of Business, and a Bachelor of Arts in Economics and Psychology from Williams College, Massachusetts, United States.Vice-Chair of the Board of the American Chamber of Commerce in Ukraine. Chairman of the Board of Junior Achievement Ukraine &nbsp;

Alexander McWhorter, Citi Country Officer and Banking Head for Ukraine

Lenna Koszarny is Founding Partner and Chief Executive Officer of Horizon Capital, the leading private equity firm in Ukraine with over $1.8B in assets under management, backed by 40+ institutional investors with a capital base exceeding $700B. Under her leadership, Horizon Capital has raised over $1b since the 2014 invasion, as well as catalyzed the largest investment in Ukraine in decades, a $1.5bn acquisition and capital expansion of Ukraine-based telecom players Datagroup-Volia and Lifecell by telecom and tech entrepreneur Xavier Niel. Ms. Koszarny is credited with the Forbes «2024 Deal of the Year» for attracting this $1.5B telecom investment for Ukraine, honored with 2025 Deal Innovation Award from the Global Private Capital Association for Datagroup-Volia-Lifecell Transaction, she was also recognized for raising the largest fund for Ukraine – $350M – during these challenging period for the country. In February 2022, Horizon Capital was honored as 2021 Firm of the Year for Central and Eastern Europe by Private Equity International.Ms. Koszarny’s leadership has been recognized nationally and internationally, including Ukrainska Pravda’s «Top 100 Leaders of Ukraine: Beyond What is Possible» rating in November 2024, its &nbsp;«Top 100 Power Women Leaders» in March 2024 and its «Top 100 Leaders of Ukraine During Wartime» in November 2023, and her inclusion in Forbes Ukraine’s « Top 50 Women Leaders Leading Ukraine to Victory» in May 2023. In November 2024, she was included in the inaugural National Security News «Top 50 Women in Security List», the Financiers category. Ms. Koszarny leads Horizon Capital in an $12T industry with circa 15% senior women, inspiring greater engagement of women in private equity and investing. Under her leadership, HCGF IV is the first 2X Flagship Fund in Central and Eastern Europe, 1 of circa 10 in total, and 1 of only 2 globally that are led by a woman Founding Partner &amp; CEO. She is a Board Member of the Global Private Capital Association (GPCA) uniting firms managing over $2TN in assets; an elected Member of the Mid-Market Platform Council of Invest Europe; a Member of the Private Equity Women Investor Network (PEWIN); a Founding Member of the Ukraine House Davos Organizing Committee, and in July 2022, was recognized in Private Equity International’s 2022 Women of Influence in Private Markets list. She is also Executive Vice-President of Ukraine Moldova American Enterprise Fund (UMAEF, formerly Western NIS Enterprise Fund), a $285M US-government backed fund; Chair of the Board of Directors, American Chamber of Commerce in Ukraine, whose members have invested over $50B in Ukraine; a Member of the Board of the Ukrainian Startup Fund launched by the Government of Ukraine (2019-2025); a Member of the Supervisory Board of Ukrainian Leadership Academy; and, served as the first Vice-Chair of the Advisory Council of Kyiv-Mohyla Business School.On August 24, 2020, the 29th anniversary of Ukraine’s independence, Ukraine’s President Volodymyr Zelensky awarded Ms. Koszarny with an Order of Merit for Service to Ukraine, third level, for her contribution to the country’s economy and investment climate. She is also a recipient of a Commemorative Medal issued on the occasion of the 25th Anniversary of Independence by the President of Ukraine. In May 2024, she was awarded the 2024 Tryzub Leadership Award by The Myhal Family Foundation, in partnership with The Shevchenko Foundation. Ms. Koszarny is a CPA and a 1991 HBA graduate of Ivey Business School. She has been residing and working in Kyiv, Ukraine for over 30 years.

Lenna Koszarny, Founding Partner and CEO of Horizon Capital

Read the full Citi GPS Rebuilding Ukraine Report here 

Watch on YouTube

How will Ukraine's strength power a bright future?

In this episode of Citi Institute podcast, host Alex Miller is joined by Alexander McWhorter, Citi Country Officer and Banking Head for Ukraine and Lenna Koszarny, Founding Partner and CEO of Horizon Capital.&nbsp;

/rcs/citigpa/storage/public/CIP_The_Reconstruction_of_Ukraine_Transcript_FINAL.pdf

The Reconstruction of Ukraine

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