Euro News Source
No Result
View All Result
Wednesday, June 7, 2023
  • Login
  • Home
  • Latest News
    • All Europe
    • United Kingdom
      • England
      • Ireland
      • Scotland
      • Wales
    • France
    • Germany
    • Italy
    • Spain
    • Austria
    • Belgium
    • Netherlands
    • Switzerland
  • Economics
  • Politics
  • Health
  • Sports
  • Videosnew
Subscribe
Euro News Source
  • Home
  • Latest News
    • All Europe
    • United Kingdom
      • England
      • Ireland
      • Scotland
      • Wales
    • France
    • Germany
    • Italy
    • Spain
    • Austria
    • Belgium
    • Netherlands
    • Switzerland
  • Economics
  • Politics
  • Health
  • Sports
  • Videosnew
No Result
View All Result
Euro News Source
No Result
View All Result
Home News Italy

Explainer: Europe’s banks fear payment system could be casualty of Russia-Ukraine crisis

by Euro News
February 9, 2022
in Italy
A A
0
152
SHARES
1.9k
VIEWS
FacebookTwitterLinkedin

FRANKFURT, Feb 9 (Reuters) – Amid fears of a Russian invasion of Ukraine, Italy’s UniCredit has backed out of a potential acquisition in Russia and Austria’s Raiffeisen Bank International has set aside risk provisions for possible sanctions on Russia.

What the region’s banks now fear most is that Russia gets banned from a widely used payment system, bankers told Reuters, with one describing such a move as an “atomic bomb” for the industry because it would prevent the repayment of debts.

Here’s what is at stake for Europe’s banks as the crisis shows no signs of abating:

Register now for FREE unlimited access to Reuters.com

WHICH COUNTRIES’ BANKS ARE MOST EXPOSED TO RUSSIA?

Banks in Italy, France and Austria are the world’s most exposed international lenders to Russia. Italian and French banks each had outstanding claims of some $25 billion on Russia in the third quarter of 2021, according to figures from the Bank for International Settlements (BIS). Austrian banks had $17.5 billion. That compares with $14.7 billion for the United States.

Reuters Graphics

WHICH BANKS ARE MOST EXPOSED?

European banks with subsidiaries in Russia are most at risk of sanctions, according to JPMorgan research. The investment bank’s study pointed to a handful of banks, including UniCredit (CRDI.MI), RBI (RBIV.VI), France’s Societe Generale (SOGN.PA), and ING (INGA.AS) of the Netherlands, as having notable exposure to Russia.

RBI said its exposure was manageable, while ING said it was well prepared. Societe Generale said it was closely monitoring developments and confident about its Russia business. UniCredit did not immediately respond to a request for comment.

WHAT SANCTIONS CURRENTLY EXIST?

In reaction to Russia’s annexation of Crimea in 2014, and in the following years, the UnitedStates and EuropeanUnion imposed sanctions that include blacklisting specific individuals, sought to limit Russia’s state-owned financial institutions’ access to Western capital markets, imposed bans on weapons trade and other limits on the trade of technology, such as that for the oil sector.

Over that period, foreign bank exposure to Russia has more than halved, BIS data show.

WHAT NEW SANCTIONS ARE WE TALKING ABOUT?

European banks are closely watching U.S. legislation to sanction Russia. A Senate bill would target the most significant Russian banks and Russian sovereign debt. read more

Meanwhile, in Europe, negotiators say they are ready to impose “massive” economic sanctions on Russia if it invades Ukraine, but officials and diplomats say the threat depends on complex negotiations involving 27 member states that are far from complete. Negotiations are being held secretly. read more

In addition to widening the circle of Russian financial institutions that would be affected, measures are most likely to include efforts to keep Russia’s energy sector from expanding, as well as blacklisting people and companies allied to President Vladimir Putin, according to Paul Feldberg, partner in the investigations, compliance and defence group at Jenner & Block.

“We are likely to see many more individuals and entities designated than we have seen before,” Feldberg said.

WHAT’S THE BIGGEST CONCERN FOR EUROPEAN LEADERS?

A major worry is that Russia gets cut off from the SWIFT global payment system, which handles international financial transfers and is used by more than 11,000 financial institutions in over 200 countries. There is a precedence for such a move: Iran was banned a decade ago.

Jan Pieter Krahnen, a finance expert at Frankfurt’s Goethe University and adviser to the German finance ministry, said the short-term consequences of a ban are opaque, and might backfire. Long-term, it could lead to the buildup of a parallel system that would be “a loss for the global system, and also facilitate conflicts further down the road as opportunity costs vanish”.

Heinrich Steinhauer, who represents the German lender Helaba in Moscow, said such a move would be tantamount to a giant debt forgiveness program by prohibiting payments, describing it as a “sort of atomic bomb”. “For many this would be a catastrophe. For many in the European Union and Russia, and less so for the U.S. because economic ties are fewer,” he said.

WHAT ELSE IS POSSIBLE?

Financial institutions involved in swaps, futures, forwards and other derivatives that trade with Russian counterparties could also become subject to sanctions rules, according to Jonathan Moss, partner at the law firm DWF.

A prohibition of trading of Russian bonds in the secondary market would mean that holders of Russian bonds might be forced to sell, Moss said.

European banks oppose including Russian bonds in a sanctions package, said one person with direct knowledge of their stance.

WHAT ACTIONS HAVE EUROPEAN BANKS TAKEN SO FAR?

Last week, RBI said it had earmarked 115 million euros in provisions for possible sanctions on Russia, underscoring risks for European lenders as tensions flare.

In late January, UniCredit dropped a potential bid for Russian state-owned Otkritie Bank due to the Ukraine crisis.

ING of the Netherlands disclosed last week that it has 4.7 billion euros in exposure in Russia, but only around 25% of that is onshore. ItsCEO said the bank plans to remain in Russia and would act accordingly if any new sanctions arose.

Register now for FREE unlimited access to Reuters.com

Reporting by Tom Sims, Lawrence White and John O’Donnell; Writing by Tom Sims; Editing by Mark Heinrich

Our Standards: The Thomson Reuters Trust Principles.

Source: Reuters

Tags: ANLINSATBISVBISV08BLUXBNKSBNKS1BSVCCEEUCMPNYDEEMRGEUROPEXPLNEZCFINFINSFINS08FRITMTGFXNLUAWEU

Related Posts

Italy

Italy’s right-wing government resuscitates mega Sicily bridge project

November 22, 2022
Italy

Italy’s Meloni hails “courageous” budget, opposition plans protests

November 22, 2022
Italy

Factbox: Italy’s government approves 2023 budget, key points

November 22, 2022
Italy

Italy to press ahead with plans to sell ITA despite MSC snub

November 22, 2022
Italy

Venice kept dry as dam system wards off exceptional high tide

November 22, 2022
Italy

Italy to extend Ukraine arms supply law for 2023 – minister

November 21, 2022
Please login to join discussion
  • Trending
  • Comments
  • Latest

Dutch speed up coronavirus booster campaign, cut waiting time to three months

December 14, 2021

Manchester United – Manchester City live – 6 November 2021

November 6, 2021

Irish couple, 23 and 26, ‘carry out vicious knife attack in Sydney’

October 14, 2021

Woman livestreams fatal stabbing of half-sister

October 25, 2021
Freedom Day

Freedom Day

0
Fire Accident

Fire Accident In Iraq

0
Scotland

Advice from the Scotland Prime Minister

0
Brexiteers

Brexiteers Should Thank The EU

0

Manchester United could be place up for sale as the Glazer relatives request new financial investment – report

November 22, 2022

Lucy Letby demo: Nurse went salsa dancing the night time soon after allegedly attempting to murder toddler, court explained to

November 22, 2022

Observe as Mark Allen performs remarkable 5-cushion escape in German Masters qualifying win

November 22, 2022

Manchester United entrepreneurs to discover sale as Glazers search for new expenditure

November 22, 2022

Recent Posts

Manchester United could be place up for sale as the Glazer relatives request new financial investment – report

November 22, 2022

Lucy Letby demo: Nurse went salsa dancing the night time soon after allegedly attempting to murder toddler, court explained to

November 22, 2022

Observe as Mark Allen performs remarkable 5-cushion escape in German Masters qualifying win

November 22, 2022

Manchester United entrepreneurs to discover sale as Glazers search for new expenditure

November 22, 2022

France – Australia Live – Globe Cup: Soccer Scores & Highlights

November 22, 2022

Loved ones of previous police officer call for help for people facing domestic abuse by serving officers

April 26, 2023

Recent Posts

  • Manchester United could be place up for sale as the Glazer relatives request new financial investment – report
  • Lucy Letby demo: Nurse went salsa dancing the night time soon after allegedly attempting to murder toddler, court explained to
  • Observe as Mark Allen performs remarkable 5-cushion escape in German Masters qualifying win
  • Manchester United entrepreneurs to discover sale as Glazers search for new expenditure
  • France – Australia Live – Globe Cup: Soccer Scores & Highlights

Categories

  • Austria
  • Bahamas
  • Belarus
  • Belgium
  • Breaking News
  • Brexiteers
  • Business
  • China
  • COVID Cases
  • Covid-19
  • Cyber security
  • Debt
  • Economics
  • Energy
  • England
  • Fashion
  • Fire Accident
  • Food
  • France
  • Freedom Day
  • Germany
  • Health
  • Human Launch
  • Humanitarian
  • Ireland
  • Italy
  • Netherlands
  • News
  • Norway
  • Opinion
  • Politics
  • Refugees
  • Russia
  • Russia
  • Rwanda
  • Saudi Arabia
  • Science
  • Scotland
  • Scotland
  • Spain
  • Spanish-Flu
  • Sports
  • Switzerland
  • Travel
  • Ukraine
  • United Kingdom
  • Videos
  • Wales
  • Zambia

Site Navigation

  • About
  • Advertise
  • Guest Post
  • Privacy Policy
  • Terms & Conditions
  • Contact Us
Euro News Source

Euro News Source is one of the best sources of European News. We provide the latest news from the European Union and its member states, local and international political, economic and sports news. Follow us to receive all news from around the European Union.

© 2021 Euro News Source.

No Result
View All Result
  • Home
  • Latest News
    • All Europe
    • United Kingdom
      • England
      • Ireland
      • Scotland
      • Wales
    • France
    • Germany
    • Italy
    • Spain
    • Austria
    • Belgium
    • Netherlands
    • Switzerland
  • Economics
  • Politics
  • Health
  • Sports
  • Videos

© 2021 Euro News Source.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In
Are you sure want to unlock this post?
Unlock left : 0
Are you sure want to cancel subscription?