Direct Exposures
One silver lining for banks is that their direct exposures to Russia are relatively small. For instance, HSBC Holdings Plc’s Russian subsidiary had 89 billion rubles ($700 million) of assets at the end of June 2021, about 0.02% of the bank’s total, according to the unit’s interim accounts. Of this, about $250 million was linked to the Russian central bank, which has been sanctioned by the U.S. HSBC has just one branch left in Russia after pulling back several years ago. The bank declined to comment.
Credit Suisse said this week that its net credit exposure to Russia at the end of 2021 was 848 million Swiss francs ($914 million) and that this had been reduced since the start of the year. Deutsche Bank had a net loan exposure of about 600 million euros ($710 million) at year-end.
Citigroup was already attempting to restructure its Russian business, which has about 1,200 corporate and 500,000 consumer clients, before the outbreak of the war and has been trying to sell its local consumer banking unit. The lender has said that under a severe stress scenario it could lose about $4.9 billion.
The final cost for these companies is far from clear, though, with institutions racing to keep up with the political maneuvers.
“The folks who are issuing sanctions are drinking from a fire hose with a thimble and so they are overwhelmed as well,” said Mario Mancuso, a partner at law firm Kirkland & Ellis LLP. “But that lag is producing a lot of confusion about the current state of affairs.”
--With assistance from Sridhar Natarajan, Dinesh Nair, Libby Cherry, Nicolas Parasie, Hannah Levitt, Steven Arons, Marton Eder and Sonia Sirletti.
This article was provided by Bloomberg News.