The conflict in Ukraine has prompted many international banks to reconsider their presence in Russia or to quickly embark on the arduous task of unwinding their activities there.
Some banks have disclosed the maximum hit they could take in a worst-case scenario, but a more accurate estimate of the actual losses they are expected to take will take time.
Italian and French banks have the largest exposure to Russia, worth just over $25 billion each at the end of September, followed by Austrian banks with $17.5 billion, according to Bank for Settlements data. international.
The exposure of US banks stands at $14.7 billion, according to BIS data.
Here are the details on the most exposed banks:
EUROPEAN BANKS
RAIFFEISEN BANK INTERNATIONAL (RBI)
RBI said it was considering a possible withdrawal from Russia, where it has operated since the collapse of the Soviet Union. The activities there contributed almost a third of RBI’s net profit in 2021, which amounted to 1.5 billion euros.
The Russian activity of RBI holds 2.4 billion euros in capital, or 18% of consolidated shareholders’ equity. Tenth largest bank in Russia in terms of assets, it employs around 9,000 people.
RBI’s overall exposure to Russia stood at 22.85 billion euros at the end of last year, more than half of which was in the private corporate sector.
It includes 11.6 billion euros in customer loans (ie 11.5% of the group), more than 80% in rubles.
The cross-border exposure to Russia is only €1.6 billion without funding from the parent company in Vienna. RBI also holds 2.2 billion euros in loans to Ukrainian customers.
SOCIETE GENERALE
Societe Generale had 18.6 billion euros of global exposure to the country at the end of 2021 – or 1.7% of the group’s total. Its Russian Rosbank unit has approximately 200 branches and 12,000 employees, which rise to 15,000 for all of the group’s activities.
More than 80% of the exposure, or €15.4 billion, is held locally by Rosbank, with only €3.2 billion cross-border, of which €600 million is off-balance sheet.
The French bank, which started doing business in Russia in 1872, left in 1917 and returned in 1973, said its Russian business in 2021 accounted for 2.7% of the group’s net profit.
SocGen calculated that it would lose half a percentage point of its Tier 1 capital ratio in an extreme scenario where its Russian business is confiscated.
Of SocGen’s Russian exposure, 41% is for retail and 31% for corporates. Exposure to Russian sovereign entities amounts to €3.7 billion.
UNICREDIT
Italy’s second-largest bank plans to leave Russia, where it runs the country’s 14th-largest bank with 4,000 employees.
A complete delisting of UniCredit’s Russian business, including cross-border exposure and derivatives, would cost around 7.4 billion euros ($8.1 billion), bringing the Tier 1 capital ratio to around 13% versus 15.03%.
UniCredit’s cross-border exposure to Russian clients amounts to €4.5 billion, net of collateral. Direct exposure is €1.9 billion net of currency hedging.
It could also suffer a loss of up to 1 billion euros on derivatives if the value of the ruble falls to zero.
UniCredit will still pay cash dividends for 2021 in a worst-case scenario, while a planned share buyback of 2.6 billion euros depends on maintaining the capital base above 13%.
INTESA SANPAOLO
The largest Italian bank analyzes its exposure to Russia and Ukraine which, net of guarantees, amounts to 5.1 billion euros in loans and 0.6 billion off-balance sheet. Some 200 million euros of loans are intended for entities hit by sanctions.
Intesa, which serves corporate clients in Russia with a workforce of 980 people, is conducting a strategic review of its presence.
AGRICULTURAL CREDIT
The French bank’s exposure to Russia – both onshore and offshore – is 6.7 billion euros, or 0.6% of its commercial loan portfolio as of December 31.
This includes €2.9 billion of offshore exposure to 15 major Russian companies, including commodity producers and exporters. The wholly-owned subsidiaries in Ukraine and Russia together hold 376 million euros in equity.
Crédit Agricole is closely monitoring its exposures to Russia, but has ruled out any impact on 2021 dividends.
BNP PARIBAS
The French bank disclosed total exposure of around 3 billion euros ($3.3 billion) to Russia and Ukraine, meeting its announced financial targets for 2025.
ING
The Dutch bank has 5.3 billion euros in loans to Russian customers, or 0.9% of its loan portfolio. Around 700 million euros are affected by new sanctions.
GERMAN BANK
The German bank, which announced that it would end its Russian activities by reversing its previous position, had a gross exposure to Russia of 2.9 billion euros at the end of 2021.
It includes €1.4 billion of loan exposure (0.3% of its loan portfolio) and €1.5 billion of contingent risks related mainly to undrawn commitments. Exposure to loans is €600 million net of guarantees and sureties on assets.
COMMERZBANK
The German lender reduced its exposure to Russia to 1.3 billion euros from 1.9 billion in recent weeks.
SWISS CREDIT
The Swiss bank is reviewing its Russian operations after revealing that around 4% of assets in its core wealth management business are owned by Russian clients.
It had initially only disclosed a gross credit exposure of 1.57 billion Swiss francs ($1.7 billion) to Russia at the end of 2021, or 848 million net of hedges.
UBS
Switzerland’s largest bank said its direct exposure to Russia accounted for $634 million of its total emerging market exposure of $20.9 billion at the end of 2021.
AMERICAN BANKS
CITIGROUP
Worst hit among US banks, Citi has an exposure to Russia of $9.8 billion. He could lose nearly half of that in the worst-case scenario, he said, as he accelerates withdrawal plans.
The total includes $8.2 billion in third-party exposures and an additional $1.6 billion outside of its Russian subsidiary.
GOLDMAN SACHS, JPMORGAN
Both banks said they were actively ending their business in Russia. Goldman had reported Russian credit exposure of $650 million. JPM has 160 employees in Moscow.
Source: Reuters (Reporting by Valentina Za; Editing by Toby Chopra)
