26 January 2022

FT: ECB warns European lenders on Russia sanctions risk

The European Central Bank has warned lenders with significant exposure to Russia to ready themselves for the imposition of international sanctions against the country if Moscow invades Ukraine. The warning from the ECB, which supervises 115 of the biggest eurozone banks, came as the US warned that Russia would face “massive consequences” if sent troops into Ukraine.

Sanctions would raise considerable risks for the international banks with large Russian exposure including Citi in the US, France’s Société Générale, Austria’s Raiffeisen and Italy’s UniCredit. ECB officials have asked for details of how the banks would handle different scenarios, such as a move to block Russian banks from accessing the Swift international payments system, according to several people briefed on the talks.

The requests underlined how the ECB wants to ensure that European banks are able to comply with any sanctions regime and quickly cut out clients with whom they are banned from doing business. The central bank has explored the risks of various possibilities and pressed the banks to share details of their own assessments and contingency plans, according to people briefed on the discussions.

It has also requested information on Russian and Ukrainian exposure from Deutsche Bank and ING, the biggest lenders in Germany and the Netherlands, respectively. Citi, Deutsche Bank, SocGen, Raiffeisen and ING declined to comment, as did the ECB. UniCredit could not be reached for comment. International banks, including their Russian subsidiaries, have about $121bn in assets owed to them by Russian-based entities, and there is $128bn in loan and deposit funding from Russian entities to foreign banks, according to the Bank for International Settlements...

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