They set aside more than $10 billion for losses if they leave the country
Western banks have set aside more than $10 billion for losses if they leave Russia, according to the Financial Times. The reason for the curtailment of profitable business in our country by the world’s financial giants is the international sanctions imposed. Whether the Russian banking system will suffer, and how such a powerful “door slam” from the largest banking groups can affect customers, MK found out from experts.
According to the Financial Times, total foreign banking investments in our country reach $86 billion. Russian branches of foreign banks employ 40,000 employees. The publication recalled that this week the Italian bank UniCredit allocated 1.3 billion euros to cover possible losses from leaving Russia and warned that it would lose 5.3 billion euros if all of its business in our country was liquidated. The bank employs 4,000 Russian employees and serves 2 million clients.
The French group Societe Generale has allocated 561 million euros in reserves for the first quarter of 2022. In April, the bank announced that it was selling its stake in Rosbank to Interros, owned by billionaire Vladimir Potanin. The amount of the transaction, according to various estimates, amounted to 40-60 billion rubles. Another French bank, Crédit Agricole, announced that it has set aside 389 million euros and writes off 195 million euros in the total value of its business in Ukraine. In March, the international structure announced that they were suspending their activities in the country.
American conglomerate Citigroup warned of possible losses of $3 billion. In April, the bank allocated $1 billion for its financial operations in Russia. The bank has been trying to sell its business in our country since last year. In April, the bank announced the suspension of retail business in the Russian Federation and focusing on areas with greater potential.
Austrian Raiffeisen Bank International also allocated 319 million euros for possible losses. The day before, on May 6, the bank announced that it had terminated relations with a number of Russian respondent banks. However, the head office added that the decision does not apply to the Russian “daughter”, that is, Raiffeisenbank. However, it is not yet evening, as they say in such cases. Previously, no one believed in the complete withdrawal of the Visa and Mastercard payment systems, which concentrated 70% of the entire Russian payment market in their hands and received large incomes from this. But since March 10, they no longer work in our country. Experts told MK what will happen to Russian clients and the financial system if Western banks leave the market of our country.
Artem Tuzov, Executive Director of the Capital Market Department at IC Univer Capital:
“According to the law, all banks operating in Russia are Russian legal entities. They are under the supervision of the Central Bank of the Russian Federation. This means that they cannot simply “leave”. Before that, it is necessary to completely curtail activities, or sell the bank. In other words, nothing will change for the Russian banking system, as banks will either simply change ownership or gradually end their relationship with clients through loans and deposits.
If the bank is sold, nothing will change for its customers. If the bank gradually curtails its activities, almost nothing will change for its customers, but it will look different: deposits will be returned, and loans will need to be repaid on schedule. The losses that Western banks reserve are long-term investments in the brand and the likelihood that they will have to sell the bank below capital, that is, the losses of foreign banks from leaving Russia, will not affect their clients in any way.
Andrey Plotnikov, international financial analyst:
“The deferred reserves of a number of Western banks, of course, are very correct measures, since leaving the Russian market will still bring them a shortage. Nevertheless, the share of Russian clients in foreign banks is not so large. For example, the Austrian Raiffeisenbank had no more than 10-12% of the participation share of its Russian partners. Even if foreign partner banks completely leave the Russian market, this will not greatly affect the Russian banking system, because today our banking system is completely autonomous. Yes, and Russian banks themselves in the current realities are becoming more independent of foreign partners.
But if you have loans, savings or deposits in these banks that are going to leave the territory of the Russian Federation, then here we have two scenarios for further action. First – you can pick them up yourself and withdraw your savings, but here you need to look at the terms of your agreement with the bank. Second, your debts, loans and deposits can be transferred to Russian banks. All this means that you won’t lose your money anyway. My advice is to transfer your savings to Russian banks.”