UniCredit And BNP Paribas Detail Major Russian Risks Amid Market Recovery

UniCredit and BNP spoke in detail about multibillion-dollar loans in Russia
BNP cuts Russian IT staff and bolsters cyber defenses
S&P Global Suspended Commercial Activities in Russia
European bank stocks rebound amid broad relief rally

MILAN/LONDON, March 9 – Italy’s UniCredit (CRDI.MI) and France’s BNP Paribas (BNPP.PA) are the latest to announce their risks in Russia, warning of billions of euros in financial fallout from Moscow’s invasion of Ukraine .

Banks, insurers and asset managers are scrambling to distance themselves from Russia and assess their risks after Moscow was hit with heavy Western sanctions following the invasion of Ukraine that began last month.

Russia calls its actions in Ukraine a “special operation”.

BNP Paribas has also disconnected its employees in Russia from its internal computer systems as it seeks to bolster its defenses against any potential cyber attacks, a source with direct knowledge of the matter told Reuters.

The French lender is said to be the first major bank to exclude employees in Moscow from its IT networks. More

The European Union on Wednesday agreed new sanctions against Russia and its ally Belarus that blacklist 14 more oligarchs and freeze relations with Belarus’ central bank and three of its biggest creditors. More

Financial information provider S&P Global (SPGI.N) added to a growing list of companies to suspend trading in Russia, a day after Britain’s London Stock Exchange group halted some operations in the country.

Italy’s second-largest bank, UniCredit, said late Tuesday that a complete write-down of its Russian business would cost it about 7.4 billion euros ($8.1 billion). More

BNP Paribas said its total investment in Russia and Ukraine is around 3 billion euros ($3.3 billion), which it says is relatively limited.

Meanwhile, Deutsche Bank (DBKGn.DE) said on Wednesday that its presence in the financial markets in Russia and Ukraine is very limited. Deutsche Bank has significantly reduced its presence in Russia and its local presence since 2014, with further reductions in the past two weeks, the bank added.

Shares in Europe’s biggest financial companies have plummeted since Russia’s invasion of Ukraine as investors feared the dependence of some institutions on Russia and braced for a potential wider economic slowdown.

UniCredit said that in a worst-case scenario, the capital adequacy ratio would drop by 2 percentage points, but is nevertheless sticking to its dividend and share buyback plans.

Shares of UniCredit rose 11.68% and BNP Paribas 9.95%, while the broader STOXX index of European banks rose 7.49% (.SX7P) on the day, showing a partial recovery from the recent fall.

The S&P 500 (.SPX) posted its biggest one-day percentage gain since June 5, 2020.

Analysts speculated that the rebound could be a temporary relief rally. More

“The mood in the markets has changed dramatically, and stocks are experiencing significant growth. The fact that Western governments seem to be waging an economic war against Russia, rather than a military conflict, has contributed to the overall mood,” wrote David Madden, marketer. analyst at Equity Capital.

European banks entered 2022 on a wave of optimism not seen in more than a decade, but investors and analysts warn that the Ukraine crisis could wipe them out. More

Economists at Credit Suisse cut their growth forecast for Europe on Wednesday and now expect the region to grow by just 1% this year as the Ukrainian crisis soars commodity prices and disrupts supply chains. More

Among European banks, the Austrian Raiffeisen Bank International (RBIV.VI) and the French Societe Generale (SOGN.PA) have the largest participation in Russia. read more Shares of both companies rose strongly during the day on the back of a broader rebound.

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S&P Global has joined rival credit rating agencies Moody’s and Fitch in suspending commercial operations in Russia.

The move comes as the London Stock Exchange has suspended access in Russia to products containing news and commentary, as well as all new sales of products and services. LSEG stated that the data products will continue to be available to customers currently served. More

LSEG distributes Reuters news and commentary as part of its production. (TRI.TO), the parent company of Reuters News, owns a minority stake in the LSE.

A new Russian law allows journalists to be imprisoned for reporting on any events that could discredit the Russian military.

Two of the world’s largest insurers, Britain’s Prudential (PRU.L) and Legal & General (LGEN.L), said on Wednesday that each has very little risk to Russia and no plans to increase it.

Financial firms are also preparing for other potential war-related risks, and regulators are working closely with companies to prepare defenses against the threat of cyberattacks.

The operator of the Swiss stock exchange SIX said that at the beginning of the invasion there was an increase in the number of hacker attacks, but this has since subsided. More

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Reporting by Valentina Za in Milan and Sinead Cruz and Iana Withers in London, additional reporting by Sudeep Kar-Gupta in Paris, Niket Nishant in Bangalore, Carolyn Cohn and Hugh Jones in London, Selena Lee in Hong Kong. Editing by Elaine Hardcastle, Lisa Shoemaker. and Matthew Lewis

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