From contagion to sanctions, European banks prepare for Russian fallout – The Irish Times

On Tuesday, European banks braced for fallout and new sanctions after Russia ordered troops into breakaway regions of eastern Ukraine, with HSBC warning of market contagion and l Austrian Raiffeisen Bank International preparing ‘crisis plans’.

European banks – especially those in Austria, Italy and France – have the world’s most exposure to Russia, and for weeks have been on high alert if governments impose new sanctions on the country. .

The European Union is discussing banning trade in Russian government bonds and punishing hundreds of people, with possible decisions later on Tuesday. The United States is also preparing a set of sanctions.

In proof of the seriousness with which Western European leaders are treating the latest Russian measures in Ukraine, German Chancellor Olaf Scholz has declared that he is shelving the certification of the Nord Stream 2 gas pipeline, an important future source of energy for the most great economy of Europe.

The boss of HSBC, one of Europe’s biggest banks, said on Tuesday he was concerned about the risk of “wider contagion” to global markets from the worsening crisis in Ukraine, even if exposure direct from the bank was limited.

“It is clear that there is a likelihood of contagion or second order effect, but it will depend on the severity of the conflict and the severity of the retaliation if there is conflict,” Noel Quinn told Reuters in a statement. interview.

RBI, which has large operations in Russia and Ukraine, said while business was now normal, “in the event of an escalation, the crisis plans the bank has prepared over the past few weeks will come into effect.”

Shares of the Austrian lender were down 5% at midday on Tuesday, from daytime lows.

ING of the Netherlands, which has a significant presence in Russia, said: “Further escalation of the conflict could have major negative consequences.”

As policymakers scramble to put in place sets of sanctions, German banks said they needed to ensure the sanctions were “precise and unambiguous”, removing any room for interpretation that could make it difficult their application by financial companies.

Details are important as failure to comply would result in severe penalties.

“For the banks, it is crucial that the sanctions are worded sufficiently precisely and unambiguously, (and) leave no open questions for interpretation,” the German banking association said in a statement.

For the moment, the banks are in uncertainty until the sanctions become concrete. “We are monitoring the situation,” said a spokesman for the European Banking Federation in Brussels. -Reuter