MILAN, March 1 – The latest wave of sanctions against Russia over its invasion of Ukraine has plunged the global banking industry even deeper into turmoil as Western countries try to squeeze Moscow’s access to money for its economy and international trade.
Some Russian banks will be excluded from the international payment system SWIFT, and most importantly, other sanctions have been targeted at the country’s central bank to prevent it from using its foreign reserves. Read more
The moves are intended to undermine Moscow’s ability to withstand broader economic sanctions, but also affect Western banks that are exposed to the Russian economy.
Sberbank’s European arm (SBER.MM), Russia’s largest lender, is facing failure, the European Central Bank said after a reduction in deposits caused by the crisis. Read more
In Europe, Italian and French banks have the largest exposures in Russia, with just over $ 25 billion each at the end of September, followed by Austrian banks with $ 17.5 billion, according to the Bank of International Settlements (BIS).
The exposure of American banks amounts to 14.7 billion dollars, according to BIS.
Here are some of the banks with significant Russian exposure.
US BANKS
CITIGROUP INC (CN)
The US bank said on Monday that its total exposure to Russia was close to $ 10 billion.
Citigroup ranked Russia as 21 among its 25 largest exposures in countries with $ 5.4 billion in loans, securities and financing commitments at the end of 2021 – 0.3% of total exposures based on regulatory documentation.
On Monday, Citigroup gave more details, counting “total third-country exposure” to $ 8.2 billion. This includes $ 1.0 billion in cash at the Bank of Russia and other financial institutions and $ 1.8 billion in reverse repo transactions.
Citigroup also said it has $ 1.6 billion in exposures to additional Russian counterparties outside its Russian subsidiary that are not included in the $ 8.2 billion. Read more
By comparison, Goldman Sachs Group Inc (GS.N) reported $ 293 million in net exposure to Russia last month, as well as a total of $ 414 million in market exposure as of December 2021.
EUROPEAN BANKS
RAIFFEISEN BANK INTERNATIONAL (RBI) (RBIV.VI)
The Austrian lender’s Russian business ranks as the country’s ninth largest bank in terms of loans. With total assets of 15.8 billion euros, it employs about 8,700 employees to serve more than 4.5 million customers.
Its equity of € 2.4 billion represents 18% of consolidated capital.
RBI has been operating in Russia since the collapse of the Soviet Union, and its business there contributed nearly a third of the group’s net profit of 1.5 billion euros ($ 1.66 billion) last year. Read more
RBI’s exposure in Russia totals 22.85 billion euros, more than half of which is related to the corporate private sector, according to a presentation of its 2021 results.
Russia’s central bank accounts for 8% of RBI’s exposure to the country, government entities 4% and Russian banks 2%, according to the performance.
The total figure includes 11.6 billion euros in customer loans (or 11.5% of the group), more than 80% of which are in Russian rubles.
The cross-border exposure to Russia is only 1.6 billion euros without parental funding from Vienna. Raiffeisen also holds 2.2 billion euros in loans to Ukrainian customers.
Provisions against losses cover 64.3% of RBI’s impaired exposures in Russia.
RBI CEO Johann Strobl told Reuters this week that the group’s Russian subsidiary “has a very strong liquidity position and (was) registering inflows”.
SOCIETE GENERALE (SOGN.PA)
Societe Generale began doing business in Russia in 1872, then left the country in 1917, the year of the Bolshevik Revolution, to return in 1973. It has 1.5 million local customers.
Societe Generale, which controls Russia’s Rosbank, had a total of 18 billion euros in exposure to Russia at the end of last year – or 1.7% of the group’s total.
This includes both on-balance sheet and off-balance sheet items (for example, a credit line that has not yet been used).
Of SocGen’s Russian exposure, 39% is to the corporate sector and 36% to retail. Sovereign entities represent 21%, financial institutions – 4%.
Real loans rose 13.3% last year to 10.5 billion euros.
Its Russian retail business – for which an average of € 1.05 billion in capital was allocated last year – generated € 115 million in net profit in 2021, compared to € 37 million in 2020. Including financial services, the net profit of SG Russia was 152 million euros, compared to 76 million in 2020.
The bank said it had implemented measures to adapt to the new sanctions and that Rosbank continued to operate in a “safe manner”.
UNICREDIT (CRDI.MI)
The Russian subsidiary of the Italian bank ranks as the 14th largest bank in the country. UniCredit Russia’s equity of € 2.3 billion represents 3.7% of the group’s total volume.
UniCredit’s default exposure related to Russia totaled € 14.2 billion by mid-2021
Of these, about 8 billion euros are loans granted by Russian hands and financed at the local level.
The rest includes off-balance sheet positions and cross-border loans, granted mainly by UniCredit SpA to large corporations outside Russia.
UniCredit said last week that its Russian franchise accounts for only about 3% of the group’s revenue, and provisions cover 84% of its non-performing exposures.
INTESA SANPAOLO (ISP.MI)
Italy’s largest bank is financing major investment projects in Russia, such as the Blue Stream gas pipeline and the sale of a stake in oil producer Rosneft (ROSB.MM). It handles more than half of all trade transactions between Italy and Russia.
Intesa’s loan exposure to Russia is 5.57 billion euros at the end of 2021, or 1.1% of the total.
Its subsidiaries in Russia and Ukraine have assets of € 1 billion and € 300 million, respectively, which together represent only 0.1% of the group’s total assets.
ING (INGA.AS)
The Dutch bank has about 4.5 billion euros in outstanding loans with Russian customers and about 600 million euros with customers in Ukraine, from a total credit book worth more than 600 billion euros.
ING said many sanctions against Russia have been in place since 2014.
(1 dollar = 0.9016 euros)
Additional reports by Brena Hughes Negavy in Zurich, Toby Stirling in Amsterdam, Alexandra Schwartz-Görlich in Vienna, Elizabeth Dilts in New York; edited by John O’Donnell, Andrew Havens and Jane Merriman
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