European banks reveal billions of dollars in risk exposure to Russia

Credit Suisse said it had a gross exposure to Russia of 1.6 billion Swiss francs ($1.73 billion) at the end of 2021, the latest European bank to reveal the size of potential losses as Western sanctions exclude Moscow from the financial system. world.

Italy’s UniCredit and France’s BNP Paribas have also revealed billions of euros at risk from Russia. In an extreme scenario, banks could lose everything if Moscow seizes assets and sanctions render Russia-related stocks worthless.

Deutsche Bank said it put its credit risk exposure to Russia and Ukraine at 2.9 billion euros, having further reduced its exposure to Russia in the past two weeks.

Western companies have pulled out of Russia en masse after the United States, the European Union and Britain imposed sanctions aimed at curbing Moscow’s access to finance in response to its invasion of Ukraine.

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

Banks, insurers and asset managers, who rarely make political statements, have been quick to distance themselves from Russia and assess their exposures as the conflict enters its third week.

While the potential losses among Europe’s top lenders aren’t big enough to threaten their stability, analysts and investors fear it could derail their recovery plans and halt shareholder payouts.

The conflict has also upended the European Central Bank’s interest-rate hike plans, with policymakers expected to go into Thursday’s meeting divided on how to proceed and wary of making mistakes.

Credit Suisse detailed for the first time its net credit exposure to Russia at the end of the year, which included loans to wealthy clients, as well as exposure to trade finance and investment banking.

Meanwhile, BNP Paribas has isolated its Russian workforce from its internal IT systems as it seeks to bolster its defenses against any potential hacker attacks, in another sign of how the conflict is affecting Western financial institutions.

The French bank, believed to be the first major lender to have shut down staff in Moscow from its tech networks, has also put employees elsewhere on high alert for cyber threats emanating from Russia.