European bank shares stop falling, and Russia’s Sberbank exits Europe

FRANKFURT/LONDON (Reuters) – European bank shares halted their slide on Wednesday after falling to their lowest level in nearly 11 months as the fallout from the Ukraine crisis forced the European arm of Russia’s Sberbank. (SBER.MM) to close.

Russia showed no intention of stopping its attack on Ukraine, which led to heavy sanctions on Moscow and led to the exodus of major companies from the Russian market. Read more

US President Joe Biden warned Vladimir Putin that the Russian leader “has no idea what’s to come.” Russia describes its Ukrainian actions as a “special operation”.

The European Union said on Wednesday it had excluded seven Russian banks from the SWIFT messaging system, but stopped short of including banks that handle energy payments. Read more

Meanwhile, Sberbank, which reported record profits in 2021, said it was leaving the European market as its subsidiaries faced significant cash outflows and threats to employee and property safety. Read more

The move by Russia’s largest lender seemed inevitable after shutting down its European arm by order of the European Central Bank. Read more

Sberbank operated in Austria, Croatia, Germany and Hungary, among other countries, and had European assets of €13 billion ($14.4 billion) on December 31, 2020. Revenue from deposits in London is down 99.9% so far in 2022. “All sellers not buyers. ‘, a trader from London said on Wednesday.

Regulators are also preparing for a possible shutdown of the European arm of Russia’s second largest bank, VTB Bank (VTBR.MM)Amid growing concerns about the impact of the sanctions, Reuters reported on Wednesday. Read more

Credit rating agency Fitch said the asset quality of Western European banks would come under pressure from the fallout from the sanctions and that they also faced “significantly increased operational risks”.

Index of leading European bank stocks (.SX7P) Up 1.39% on Wednesday, erasing early losses that came on top of the 5.6% drop on Tuesday and 4.5% on Monday. Earlier on Wednesday, the index hit its lowest level since April 2021, down 27% from its highest level last month.

Austrian International Bank Raiffeisen (RBIV.VI)which has been operating in Russia since the collapse of the Soviet Union thirty years ago, had one of the biggest declines this week so far.

Two people familiar with the matter told Reuters that the bank is considering leaving Russia, in a move that would make it the first European bank to do so since Moscow’s invasion of Ukraine. Read more

Shares of Raiffeisen, which account for half of last month’s value, trimmed some of their earlier losses on Wednesday to close down 2.66%.

Some financial officials are trying to reassure the markets.

The Hungarian Central Bank said in an email response to Reuters that the capital position of Hungarian OTP Bank, the largest independent bank in Central Europe, is excellent and the bank can withstand further potential market shocks in Russia and Ukraine.

Chief Financial Officer Mark Mason said Wednesday that Citigroup, which has $10 billion in exposure to Russia, could face billions of dollars in losses under a worst-case scenario, although it expects its actual losses to be less. Read more

storage assets

German market regulator BaFin said it was closely monitoring the European arm of VTB Bank, which is no longer accepting new clients. Read more

The bank, headquartered in Frankfurt, had €8.1 billion in assets at the end of 2020.

Russia said on Tuesday it had imposed temporary restrictions on foreigners seeking to exit Russian assets, while trying to stem the exodus of investors.

But investors continue to dump assets. Aviva (AV.L) Chief Executive Officer Amanda Blank said Wednesday that the fund management business will deprive its small exposure to Russia “as quickly as practicable.”

Financial companies are striving to keep pace with the situation.

Mashreq Bank in Dubai (MASB.DU) They have halted lending to Russian banks and have reduced their current exposure to the country, Reuters reported. Read more

The move is one of the first reported cases of a Middle Eastern bank cutting ties with Russia, and underscores growing global tension from falling into the trap of Western sanctions.

French bank BNP Paribas (BNPP.PA) She said it is working to maintain its activities as much as possible in its Ukrainian arm Ukrsibbank, which has nearly 5,000 employees.

One of the board members said that a task force at Germany’s Commerzbank, which has a branch in Russia, meets several times a day.

(1 dollar = 0.9022 euros)

Additional reporting by Gergeli Szakas, Zuzana Szymanska, Saeed Azhar and Youssef Saba; Editing by Jane Merriman and Rosalba O’Brien

Our criteria: Thomson Reuters Trust Principles.