For Italian lender UniCredit SpA, abandoning Russia overnight also isn’t an option, people with knowledge of the matter said. The lender offers banking services to corporate and individual clients in the country through 4,000 employees and 70 branches. You can’t shutter branches that manages clients money, salaries, bills and credit lines, the people said.

A spokesman for UniCredit declined to comment.

Ruble Bonds
Though Wall Street’s appetite for Russia has cooled in recent years, they remain a crucial link between local companies and international markets. JPMorgan, the dominant bank for ruble bond issuance, has worked for the likes of Gazprom PJSC, Lukoil PJSC, and Alfa Bank AO.

The bank’s international advisory council also counts Herman Gref, the CEO of Sberbank PJSC and former government minister, among its members. “Given sanctions that are now in place, he is not participating in the council,” a JPMorgan spokesman said in an emailed statement.

Russia’s own banks also work closely with U.S. and European lenders to access equity and debt markets. Citigroup, JPMorgan and UBS were among the top equities brokers for Sberbank CIB U.K., according to public filings for the London-based investment banking unit. Citigroup also handled a small portion of VTB PJSC’s equities trading, public filings show.

These longstanding relationships have quickly become toxic. “You essentially want to avoid any kind of trading relationships with” sanctioned entities, said Virginie O’Shea, chief executive officer of Firebrand Research, a London-based capital markets research and advisory firm.

“If you look at the fines that have been meted out for KYC failures, which this tends to fall under, there are multi million dollar figures and it’s gotten to the billions before in the U.S. That’s scary amounts of money that the regulator will fine you,” she said.

Swift Exit
Last week, banks asked the U.K. government for more time to terminate derivative contracts with VTB, highlighting how hard it can be to sever all links, even when international law demands it.

One problem for banks is that a sanctioned entity may hold a lot of the cards. The 2002 Isda Master Agreement, a common template used in derivative deals, sets out how firms can close contracts using an “illegality” clause. However, the price of closing it out is set by the targeted entity -- potentially making it very expensive to exit before sanctions take effect.

“It’s a difficult problem to fix,” said Robert Daniell, a derivatives lawyer at Macfarlanes LLP. “Ideally you would have negotiated the correct way to deal with these matters into your contract years ago, but not everyone fully appreciated the concern at the time.”