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European Finance Industry Issues Cyber Warnings And Freezes Bonds In Reaction To Ukraine Invasion By Russia

European Finance Industry Issues Cyber Warnings And Freezes Bonds In Reaction To Ukraine Invasion By Russia
Following Russia's invasion of Ukraine, Europe's financial industry rushed on Thursday, with Allianz announcing it had blocked its Russian government bond exposure and Lloyds announcing it was on "heightened alert" for cyberattacks. find out more
European authorities warned that a new wave of penalties was on the way, and Deutsche Bank claimed it has contingency preparations in place.
In early morning trading, shares of major banks plummeted. The Euro Stoxx index was down 3.4 per cent mid-morning, but an index of European banking equities was down 5.6 per cent.
Banks with major Russian business were particularly heavily affected, with Raiffeisen Bank International in Austria losing 16.5 per cent and Societe Generale losing 7.6 per cent.
UniCredit's Russian unit, which is one of the country's top lenders, had its stock drop as much as 8 per cent before an automatic trading halt.
Russian forces launched missiles at multiple Ukrainian cities and landed troops on the country's shore earlier on Thursday, according to officials and media, after President Vladimir Putin authorized a "special military operation" in the east. find out more
According to statistics from the Bank for International Settlements, European banks are the most exposed to Russia in the world, with exposure in France, Italy, and Spain greatly outstripping that of US institutions.
BaFin, Germany's financial regulator, said it was keeping a close eye on the problem.
Senior officials said on Thursday that European Union leaders will impose new sanctions on Russia, freezing its assets, halting its banks' access to the European financial market, and targeting "Kremlin interests" in response to its "barbaric attack" on Ukraine.
Both Deutsche Bank and Allianz, two of Europe's largest financial institutions with business in Russia, indicated they were prepared to abide by the sanctions.
Allianz, one of the world's largest asset managers, said its holdings of Russian government bonds were "now quite low" and that it had just imposed a freeze on the instruments.
As Russia's sanctions have grown in recent years, Deutsche Bank, like many other institutions, has cut its operations in the nation.
"We have contingency plans in place," the bank said in a statement. A spokesperson declined to elaborate. The lender's shares were down more than 6.7%, one of the biggest declines among German blue chips.
Lloyds CEO Charlie Nunn told reporters that the company was on "heightened alert... internally around our cyber risk controls, which we've been focusing on for quite some time."
Nunn noted that preparation for potential cyberattacks was discussed in a meeting between government and banking industry representatives on Wednesday about Russia.
Nunn said Lloyds has been on high alert for the "past couple of months."
Intesa Sanpaolo, an Italian heavyweight that has financed big investment projects in Russia, such as the 'Blue Stream' gas pipeline and the sale of a share in the oil company Rosneft, has dropped 4.8 per cent.
Despite the fact that many bankers have downplayed Russia's relevance to their operations, Russia is inextricably connected to the European economy.
According to statistics, Russia is the European Union's fifth-largest commercial partner, accounting for 5 per cent of total commerce. The United States' commerce with Russia accounts for less than 1% of its total.
Some of the region's top bankers are more concerned about the crisis's possible side consequences.
Even if the bank's direct exposure is minimal, the CEO of HSBC, one of Europe's major banks, stated this week that "wider contagion" for global markets is a concern.

Christopher J. Mitchell

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