Banking Crisis
Summary Of Banks' Exposures To Russia, Local Presences
Here is what we know at the moment about banks' exposures to Russia in terms of loans and other investments. Some banks, such as JP Morgan and Goldman Sachs, are pulling out.
A number of major banks have set out their risk exposures to
Russia, and investment stakes in Russian assets, following the
country’s invasion of Ukraine. Here is a summary:
Deutsche Bank
Deutsche Bank
has reiterated that it has “substantially” cut its Russian
exposure since 2014, taking the same course as a number of banks
spelling out how much they are being affected by the
country’s actions.
“As we have repeatedly said, we condemn the Russian invasion of
Ukraine in the strongest possible terms and support the German
government and its allies in defending our democracy and
freedom,” the Frankfurt-listed lender said in a statement late
last week.
“Deutsche Bank has substantially reduced its Russian exposure
since 2014. Like some international peers and in line with our
legal and regulatory obligations, we are in the process of
winding down our remaining business in Russia while we help our
non-Russian multinational clients in reducing their operations.
There won’t be any new business in Russia,” it said.
As stated earlier in March, Europe’s largest bank said that it
supported the German government’s actions and would fully
implement the sanctions and other measures imposed. “Within this
framework, we continue to support our clients globally, including
with respect to their Russia and Russia-related activities. Most
of our clients with Russian operations or requirements are
European or multinational corporates who are currently adapting
their business activities in the country. We are monitoring the
situation closely and may adapt our approach as appropriate. We
have reduced our exposure to Russia significantly over recent
years and the risks are well contained.”
Societe Generale
Its exposure to Russia is limited at 1.7 per cent of the group’s
total exposure – €18.6 billion at 31 December 2021, of which
€15.4 billion is accounted for at its subsidiary Rosbank. In
2021, activities located in Russia generated 2.8 per cent of
SocGen’s net banking income and 2.7 per cent of group net
earnings.
“The group is extremely prudent and selective in the conduct of
its activities in Russia and its priorities are focused to reduce
its risks and preserve its subsidiary’s liquidity, while
maintaining diversified deposit inflows,” the French bank said.
The bank said it had a Common Equity Tier 1 ratio of 13.7 per
cent at the end of 2021.
JP Morgan
The bank is leaving Russia, as reported
here. At the time of writing, the firm does not
appear to have spelled out its exposures.
Goldman Sachs
The bank is leaving Russia and
winding down operations there. At the time of writing, the
firm does not appear to have spelled out its exposures.
Citigroup
Citigroup has the biggest presence of US banks in Russia, with a
total exposure of almost $10 billion as at the end of last year
(source: The Street).
Before Russia's attack on Ukraine, Citigroup was planning to sell its consumer banking division in Russia – it has been spinning off such businesses in Mexico and Asia as part of a global restructuring and pivot towards areas such as wealth management.
Credit Suisse
The bank said that it had SFr848 million ($914.8 million) in net
Russia credit exposures as of the end of 2021. Switzerland’s
second-largest bank said its exposure to the country was
“well-managed.” The Zurich-listed lender has set out details on
Russia’s exposures as part of its annual report.
Explaining its net credit exposure figure, the bank said that this included derivatives and financing exposures in the investment bank, trade finance exposures in the Swiss Universal Bank and Lombard and other loans in international wealth management. These net exposures have been reduced since the end of 2021. Net assets held in the bank's Russian subsidiaries, JSC “Bank Credit Suisse (Moscow)” and LLC “Credit Suisse Securities (Moscow),” totalled SFr195 million as of 31 December 2021. Country credit risk exposures to Ukraine or to Belarus were not material as of 31 December 2021.
UBS
The bank said that it identified a “small number” of global
wealth management clients hit by recent sanctions imposed on
Russia, and the affected number of loans outstanding comes to
less than $10 million. Its direct country risk exposure to Russia
contributed $634 million to its total emerging market exposure of
$20.9 billion as of 31 December 2021. That figure includes trade
finance exposures in personal and corporate banking, a single
loan in the investment bank with a non-Russian entity with key
facilities spread globally including Russia and the Commonwealth
of Independent States, Nostro and cash accounts balances, issuer
risk on trading inventory within the investment bank, and
derivatives within the investment bank.
As of 3 March, it had about $200 million of exposure stemming from reliance on Russian assets as collateral on Lombard lending and other secured financing in its global wealth management arm.
BNP Paribas
The French bank said that “gross exposures off- and on-balance
sheet on Ukraine and Russia are limited.” In Ukraine, the
exposures were 0.09 per cent of group total commitments (€1.7
billion ($1.8 billion)) and for Russia, 0.07 per cent (€1.3
billion), a total of about €3 billion overall. “Considering the
way BNP Paribas operates in those two markets and secures its
activities with guarantees and collaterals at a high level, the
net residual combined exposures of BNP Paribas for Russia and
Ukraine stand at around €500 million.”
HSBC
More than 1,700 HSBC customers have written to the bank urging it
to cut its ties with Russian oil and gas businesses, press
reports said (City AM). Many of the HSBC customers
calling for action are also considering switching to another
bank, campaign group 38 Degrees has found.
The bank said it is targeting a reduction of 34 per cent in
absolute on-balance sheet financed emissions by 2030 for the oil
and gas sector, but its comments appeared not to name Russia
specifically. (There are reportedly calls on the bank to cut
exposures to the sector in Russia.) In Russia, the HSBC
Group operates through OOO HSBC Bank (RR).
Julius Baer
The Swiss bank said its exposure was modest.
“Julius Baer’s market risk exposure to Russia is not significant
and is tightly managed. The group is further monitoring
settlement risks related to certain open transactions with
Russian financial institutions related to Russian securities,
such as market closures, the imposition of exchange controls,
sanctions or other measures which may potentially delay or impair
the counterparties’ ability to honour such claims,” it said. The
net asset value of the advisory subsidiary Julius Baer CIS
Ltd in Moscow amounted to SFr400,000 as at 31 December 2021.
The group is reducing its local activities in line with
contractual agreements, while ensuring the safety of its small
number of employees,” it said.
Barclays
No statement has been issued on exposures as far as this news
service can judge. It has asked for comment and may update in due
course.
Credit Agricole
The activities of the Paris-based group in Ukraine and Russia are
locally operated through two 100 per cent-owned subsidiaries: the
international retail bank Crédit Agricole Ukraine and the
subsidiary of Crédit Agricole CIB in Russia, CACIB AO.
The total exposure (on shore and off shore) of Crédit Agricole SA
in these two countries represents approximately 0.6 per cent of
the total commercial lending portfolio as of 31 December 2021.
Net banking income in Ukraine for 2021 was €125 million, and the
figure was €22 million in Russia.
UniCredit
Italy’s second-largest ban, UniCredit, is reviewing its
Russian business, its chief executive is reported to have said.
Andrea Orcel also said the economic environment had changed
because of the Ukraine crisis and the bank was now assuming there
would be stagflation - or a combination of low growth and high
inflation. Last week the lender said a full write-off of its
Russian business, including cross-border exposure, would cost
around €7.4 billion, endangering its ability to pay capital to
shareholders (source: Reuters, 15 March).
The lender said that a full write-off of its Russian business
would cost around €7.4 billion. UniCredit Bank Russia had a
self-funded loan position at year end 2021 of €7.8bn,
risk-weighted assets of €9.4 billion and equity of €2.5 billion.
Net of foreign currency hedges, UniCredit said that its “direct
exposure” to UniCredit Bank Russia falls to around €1.9
billion.
Furthermore, UniCredit said that Russian client cross-border
exposure is around €4.5 billion net of guarantees of around
€1 billion by non-Russian state export agencies, and accounts for
around €3 billion of risk-weighted assets. The exposure is almost
entirely to leading Russian multinational corporations and mostly
in euros and US dollars, with contracts governed by international
laws and subject to international courts of law.
(Be advised that some of this information may be out of date as of the time of going to press but we will update as soon as new information comes in. Please email tom.burroughes@wealthbriefing.com)