Global banks pay price of Russia retreat
Leading international banks exposed to Russia booked more than 11 billion euros ($12 billion) in provisions in the first quarter to brace for potential losses.
Following are details on actions taken by the banks most exposed:
RAIFFEISEN BANK INTERNATIONAL (RBI)
RBI is assessing interest from potential buyers of its Russia unit – the country’s 10th-largest bank. Options include a full or partial sale, as well as a spin-off, but any decision may take time.
Impairment losses more than quadrupled in the first quarter due to 301 million euros in provisions on its businesses in Russia and Ukraine. RBI has 2.3 billion euros of exposure to Russia in equity and other capital. It also had net cross-border exposure of 380 million euros as of April 29.
The French bank has sold Russian unit Rosbank to Interros Capital, a company linked to Russian oligarch Vladimir Potanin.
The sale, which entails a roughly 3.2 billion euro net loss on the income statement but has a negligible capital impact, rids SocGen of a 15.4 billion euro exposure to Russia.
SocGen is running down its cross-border exposure to Russia, which was 2.8 billion euros as of March 31. Provisions linked to Russia totalled 354 million euros in the first quarter.
Russia accounted for 2.7% of 2021 net income.
The Italian bank trimmed its Russia exposure in the first quarter to 7 billion euros, including by swapping assets with non-sanctioned Russian counterparts for operations in Europe.
Escalating international sanctions have thwarted attempts to swap its main local asset, AO UniCredit Bank, which is Russia’s 14th largest bank, two people close to the matter said. Opportunities for a swap are now slim and UniCredit’s aim to generate value from a deal are complicating its exit, the people said.
With a 1.2 billion euro first quarter provision, UniCredit has absorbed more than 70% of the capital hit from Russian losses it sees at up to 5.2 billion euros in a worst-case scenario.
The Italian bank, which is conducting a strategic review of its Russian presence, set aside 800 million euros to cover potential losses on its Russian and Ukrainian businesses in the first quarter.
Intesa’s cross-border exposure to Russia before the provisions totalled 3.9 billion euros as of March 31, net of guarantees. Local units Banca Intesa Russia and Ukraine’s Pravex Bank have a further 1.1 billion euros of exposure.
Overall exposure including off-balance sheet items, which CEO Carlo Messina has said carry “zero risk”, is 6.1 billion euros.
The French bank set aside 584 million euros against Russia and Ukraine in the first quarter.
It has cut its Russia exposure by 1.1 billion euros since the full-scale invasion of Ukraine. As of March 31 it had 3.8 billion euros of exposure to Russia, with a further 600 million euro off-balance sheet, cross-border exposure.
The Dutch bank booked 834 million euros in Russia-related provisions in the first quarter. Its exposure to Russia totalled 5.8 billion euros as of April 30, down from 6.7 billion on Feb. 28. Some 3.3 billion euros are affected by sanctions.
The German bank had cut its overall Russia credit exposure (including contingent risks) to 2.3 billion euros as of March 31, down from 2.9 billion euros three months earlier. It has also unwound all major derivative exposure to Russia.
The German lender cut its net exposure to Russia by more than a third from mid-February to end-April, reducing it below 1.2 billion euros. The impact of the Ukraine war drove provisions in the first quarter to 464 million euros.
The Swiss bank booked 206 million Swiss francs ($213.4 million) in losses related to Russia’s invasion of Ukraine in the first quarter.
Citi cut its total exposure to Russia by $2 billion to $7.8 billion in the first quarter and said it would lose no more than $3 billion in a severely adverse scenario, down from an initial estimate of the nearly $5 billion.
Citi set aside $1.9 billion in the period against possible losses from direct exposures to Russia and the economic impact of the war.
The overall direct financial impact from Russia and Ukraine-related instruments on first quarter revenues was a net loss of around $300 million.
The U.S. bank said provisions on Russia-related individual names accounted for a third of a total $900 million reserve build-up in the first quarter.
MIZUHO FINANCIAL GROUP, SUMITOMO MITSUI FINANCIAL GROUP
Two of Japan’s largest banks have set aside a combined $1.3 billion to cover potential losses from their exposure to Russia.
Source: Reuters (Reporting by Valentina Za; Editing by Mark Potter)