European Bank Stocks Halt Fall, Russian Sberbank Leaves Europe

FRANKFURT/LONDON, March 2 (Reuters) – Shares of European banks halted their slide on Wednesday after falling to their lowest level in nearly 11 months on the fallout from the Ukraine crisis, which forced the European branch of Sberbank Russian (SBER.MM) close.

Russia has shown no intention of stopping its attack on Ukraine, which has triggered heavy sanctions against Moscow and led to an exodus of big business from the Russian market. Read more

US President Joe Biden has warned Vladimir Putin that the Russian leader “has no idea what is coming”. Russia calls its actions in Ukraine a “special operation”. Read more

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The European branch of Sberbank, Russia’s largest lender, has been shut down by order of the European Central Bank. Read more

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

Sberbank, which posted record profits in 2021, said it was exiting the European market as its subsidiaries there faced large cash outflows and threats to the safety of employees and property. Read more

Sberbank operated in Austria, Croatia, Germany and Hungary, among other countries, and had European assets worth 13 billion euros ($14.41 billion) as of December 31, 2020.

Sberbank’s certificates of deposit in London have plunged 99.9% so far in 2022. “All sellers, no buyers,” a London trader said on Wednesday.

The impact of the crisis and the sanctions should have repercussions on European banks.

“The asset quality of major Western European banks will be put under pressure by the fallout from the Russian invasion of Ukraine,” ratings agency Fitch said on Wednesday.

“Banks also face significantly increased operational risk,” he added.

An index of major European banking stocks (.SX7P) rose 0.1% at midday Wednesday, erasing early losses that added to a decline of 5.6% on Tuesday and 4.5% on Monday. Earlier on Wednesday, the index hit its lowest level since April 2021, down 27% from last month’s highs.

Austria’s Raiffeisen Bank International (RBIV.VI), which has operated in Russia since the collapse of the Soviet Union thirty years ago, was one of the biggest falls so far this week.

The bank is considering leaving Russia, two people with knowledge of the matter told Reuters, a move that would make it the first European bank to do so since Moscow invaded Ukraine. Read more

Raiffeisen shares, which are half the value of a month ago, fell 4.7%.

Some finance officials are trying to reassure the markets.

The capital position of Hungarian bank OTP, Central Europe’s largest independent lender, is excellent and the bank can withstand possible additional market shocks in Russia and Ukraine, the Hungarian central bank said in a response. via email to Reuters. Read more

LOSS OF ASSETS

German market regulator BaFin is closely monitoring the European branch of Russian bank VTB (VTBR.MM), which was no longer accepting new clients. The bank, headquartered in Frankfurt, had 8.1 billion euros in assets at the end of 2020.

On Tuesday, Russia said it was imposing temporary restrictions on foreigners seeking to exit Russian assets, as it tried to stem an investor pullout prompted by crippling Western sanctions.

But investors continue to offload assets. Aviva’s fund management business (AV.L) will divest its small exposure to Russia “as soon as possible”, chief executive Amanda Blanc said on Wednesday.

Financial companies are scrambling to deal with the situation.

Dubai’s Mashreqbank (MASB.DU) has stopped lending to Russian banks and is reviewing its current exposure to the country, two sources familiar with the matter told Reuters. Read more

The move is one of the first reported cases of a bank in the Middle East ending its ties with Russia and underscores growing global nervousness about falling foul of Western sanctions.

France’s BNP Paribas (BNPP.PA) said it was trying to maintain business as much as possible at its Ukrainian branch Ukrsibbank, which has nearly 5,000 employees.

A working group from Germany’s Commerzbank, which has a branch in Russia, meets several times a day, a board member said.

Aki Hussain, CEO of Hiscox (HSX.L), said insurer Lloyd’s of London covered international businesses in Ukraine.

“We’ve been insuring these offices and some of the people there and have been working closely with our clients for eight weeks and effectively – to the extent they want – helping them out of the country and evacuating their staff. “

($1 = 0.9022 euros)

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Additional reporting by Gergely Szakacs, Zuzanna Szymanska, Saeed Azhar and Yousef Saba Editing by Paul Carrel, Tomasz Janowski and Jane Merriman

Our standards: The Thomson Reuters Trust Principles.

Shawanda H. Saldana