The latest wave of sanctions on Russia over its invasion of Ukraine has thrown the global banking industry deeper into turmoil, as Western countries try to squeeze Moscow’s access to cash for its economy and international trade.
Some Russian banks are being excluded from the SWIFT international payments system and, other sanctions target the country’s central bank to stop it from using its foreign reserves.
The moves aim to undermine Moscow’s ability to weather the wider economic sanctions but they also impact Western banks which are exposed to Russia’s economy.
In Europe, Italian and French banks have the largest Russian exposure, representing just over $25 billion each at the end of September, followed by Austrian banks with $17.5 billion, data from the Bank of International Settlements show.
The exposure of U.S. banks totals $14.7 billion, according to BIS data.
Following are some of the banks with significant Russian exposure.
EUROPEAN BANKS
RAIFFEISEN BANK INTERNATIONAL (RBI) (RBIV.VI)
RBI has operated in Russia since the collapse of the Soviet Union and its business there contributed almost a third to the group’s net profit of 1.5 billion euros last year and represents 18% of consolidated equity.
The Austrian lender’s Russian bank is the country’s 10th-largest by assets, employing around 8,700 staff.
RBI’s overall Russian exposure totalled 22.85 billion euros, more than half relating to the corporate private sector, it said in its 2021 results presentation.
Russia’s central bank accounts for 8% of RBI’s exposure to the country, sovereign entities 4% and Russian banks 2%, based on the presentation.
The overall figure comprises 11.6 billion euros in customer loans (or 11.5% of group), more than 80% of which are in Russian roubles.
Cross-border exposure to Russia is only 1.6 billion euros with no parent 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 Chief Executive Johann Strobl told Reuters last week that the group’s Russian subsidiary “had a very strong liquidity position and (was) recording inflows.”
SOCIETE GENERALE
Societe Generale, which controls Russian bank Rosbank, had 18.6 billion euros of overall exposure to Russia at the end of last year – or 1.7% of the group total.
More than 80%, or 15.4 billion euros is held locally by Rosbank while cross-border exposure amounts to 3.2 billion euros, including 600 million euros in off-balance sheet items.
Societe Generale started doing business in Russia in 1872, left the country in 1917 and returned in 1973.
The French group’s Russian activities in 2021 represented 2.7% of group’s net income.
The bank said on Thursday it could withstand an extreme scenario where its Russian business is confiscated, which would shave only half a percentage point off its core capital.
Of SocGen’s Russian exposure, 41% is to the retail sector, and 31% to the corporate one. Exposure to Russian sovereign entities stands at 3.7 billion euros.
UNICREDIT
UniCredit’s overall exposure to Russia totalled 14.2 billion euros as of mid-2021. That includes 8 billion euros in loans extended by its Russian arm.
The rests are off-balance sheet items and cross-border loans mainly granted by UniCredit SpA towards large corporates outside of Russia.
The Italian bank’s Russian subsidiary, AO UniCredit Bank, ranks as the country’s 14th largest bank. Its 2.3 billion euros in equity accounts for 3.7% of the group’s total.
A complete write-off of the Russian business would cost UniCredit around 1 billion euros, knocking 35 basis points off its core capital ratio.
UniCredit said last week its Russian franchise accounted for only around 3% of group revenues and provisions covered 84% of its non-performing exposures.
INTESA SANPAOLO
Italy’s biggest bank has financed 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 commercial transactions between Italy and Russia.
Intesa’s loan exposure to Russia was 5.57 billion euros at the end of 2021, or 1.1% of the total.
Its subsidiaries in Russia and Ukraine have assets, respectively, of 1 billion euros and 300 million euros, which together represent just 0.1% of the group’s total assets.
Intesa said on Thursday it was conducting a strategic review of its Russian presence.
ING
The Dutch bank has around 4.5 billion euros in outstanding loans with Russian clients and around 600 million euros with clients in Ukraine, out of a total loan book worth more than 600 billion euros.
U.S. BANKS
CITIGROUP INC
The U.S. bank said this week its total exposure to Russia amounted to nearly $10 billion and it was working to bring it down.
Citigroup listed Russia as 21st among its top 25 country exposures with $5.4 billion of loans, securities and funding commitments at end-2021 – 0.3% of overall exposures based on a regulatory filing.
On Monday, Citigroup gave more details, taking the count for “total third-party exposure” to $8.2 billion. That includes $1.0 billion in cash at the Bank of Russia and other financial institutions and $1.8 billion of reverse repos.
Citigroup also said it has $1.6 billion of exposures to additional Russian counterparties outside of its Russian subsidiary that are not included in that $8.2 billion.
As a comparison, Goldman Sachs Group Inc (GS.N) reported in a filing last month $293 million in net exposure to Russia, as well as a total of $414 million of market exposure as of December 2021.
Source: Reuters
