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Large Exposure To Russian Markets Detailed By UniCredit, And BNP Paribas

Large Exposure To Russian Markets Detailed By UniCredit, And BNP Paribas
The latest banks to disclose their Russian exposures are UniCredit of Italy and BNP Paribas of France as the two lenders warned that the financial impact from Russia's invasion of Ukraine might cost billions of euros to them.
After the West imposed harsh sanctions on Russia in response to the invasion of Ukraine that began last month, banks, insurers, and asset managers have been scurrying to remove themselves from Russia and review their risks.
Russia's invasion of Ukraine has been referred to by it as a "special operation."
According to a source with firsthand knowledge of the situation, BNP Paribas has also disconnected its Russia-based personnel from its internal computer systems in order to strengthen its defenses against any prospective cyberattack.`
The French bank is said to be the first big bank to prohibit Moscow-based employees from its IT systems.
Following Russia's invasion of Ukraine, Citigroup Inc announced on Wednesday that it is running its Russian consumer business on a more restricted basis while continuing to its earlier intentions to exit the franchise.
Meanwhile, Deutsche Bank stated on Wednesday that its exposure to Russian and Ukrainian financial markets was "very minimal." Since 2014, Deutsche Bank has drastically cut its Russian exposure and footprint, with further reductions in the last two weeks, according to the bank.
On Wednesday, the European Union approved further sanctions against Russia and its ally Belarus, placing 14 more oligarchs on the blacklist and freezing connections with Belarus' central bank and three key officials.
S&P Global, a financial information company, has joined the increasing list of corporations that have halted commercial activities in Russia, only a day after the London Stock Exchange Group halted some services in the country.
UniCredit, Italy's second-largest bank, warned late Tuesday that a complete write-off of its Russian operations will cost it 7.4 billion euros ($8.1 billion).
BNP Paribas said it has a total exposure to Russia and Ukraine of roughly 3 billion euros ($3.3 billion), which it described as being "very minimal."
Since Russia's invasion of Ukraine, shares in Europe's biggest financial businesses have plummeted as investors became concerned about some institutions' exposure to Russia and braced for a larger economic slump.
UniCredit said a worst-case scenario would reduce its capital ratio by two percentage points, but it would continue to pay dividends and buy back shares.
UniCredit shares rose 11.68 per cent, while BNP Paribas rose 9.95 per cent, with the wider STOXX index of European banks rising 7.49 per cent on the day, reversing previous losses.
The S&P 500 gained the most percentage points in a single day since June 5, 2020.
Analysts believe the recovery is really a transitory relief rally.
"The mood in the markets has swung around and stocks are enjoying a major rally. The fact that Western governments seem to be carrying out an economic war against Russia, rather than military conflict, has helped the overall sentiment," wrote David Madden, market analyst at Equiti Capital.

Christopher J. Mitchell

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