European banks reveal billions in risk for Russia as sanctions hit

Band Lawrence White and Brenna Hughes Neghaiwi

LONDON, March 10 (Reuters)Swiss credit CSGN.S said it had 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 scale of potential losses as sanctions Western powers excluded Russia from the global financial system.

UniCredit in Italy IDRC.MI and French BNP Paribas BNPP.PA also revealed billions of euros of Russian risk. In an extreme scenario, banks could lose everything if Moscow seizes assets and sanctions render Russia-related securities worthless.

German Bank DBKGn.DE said it was credit risk exposure to Russia and Ukraine was €2.9 billion and that it had further reduced its exposure to Russia over the past two weeks.

Western companies withdrew en masse from Russia as the United States, European Union and Britain imposed sanctions aimed at restricting 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 rushed to distance themselves from Russia and assess their risks as the conflict enters its third week.

While the potential losses from major European lenders are not large enough to threaten their stability, analysts and investors fear it could derail their recovery plans and halt payouts to shareholders.

The dispute has also potentially upended interest rate hikes planned by the European Central Bank, with its policymakers due to meet on Thursday, divided on how to proceed and fearful of making mistakes.

Credit Suisse for the first time detailed its net credit exposure to Russia at year-end, which included high-net-worth lending as well as exposure to trade finance and investment banking.

BNP Paribas, meanwhile, has cut off its Russia-based workforce from its internal IT systems as it seeks to bolster its defenses against any potential cyberattacks, in another sign of how the conflict is hitting Western financial institutions.

The French bank, believed to be the first major lender to bar Moscow staff from its computer networks, has also placed employees in other locations on high alert for cyber threats emanating from Russia.

($1 = 0.9269 Swiss francs)

(Reporting by Lawrence White and Brenna Hughes Neghaiwi, additional reporting by Sinead Cruise and Toms Sims. Editing by Jane Merriman)

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