Wall Street Banks Could Lose Billions in Russia: Here’s How Much Exposure They Have

Topline

The conflict in Ukraine has caused many of Wall Street’s biggest banks to begin shutting down their operations in Russia, but they could still face billions of dollars in losses as they reduce exposure and divest from Russian companies amid a barrage of Western sanctions.

Highlights

Although it will likely take a long time for banks to unwind their operations in Russia, some companies are more exposed than others, which means greater potential losses if borrowers default, but for the most part Russian investments still represent only a small part of accumulated assets.

JPMorgan Chase CEO Jamie Dimon said in an annual letter to shareholders on Monday that the bank was “not worried” about direct exposure to Russia, although he admitted, “we could still lose about $1 billion over time.”

Citigroup will be among the hardest hit on Wall Street, however, with total exposure to Russia rising to almost $10 billion by the end of 2021 – and the bank could lose nearly half of that in the worst-case scenario. she said last month.

Goldman Sachs, meanwhile, said it had Russian credit exposure of around $650 million by the end of 2021, but losses on divested assets are expected to be ‘immaterial’, sources said. to Reuters last month.

Deutsche Bank has about $1.5 billion in exposure to Russia, while Credit Suisse, which previously reported credit exposure of about $1.7 billion, recently disclosed tens of billions of dollars under management for Russian customers who might be at risk.

European banks could be hit harder by their greater vulnerability to the downside of Russian assets, but most US banks have little exposure to Russian markets, having already reduced their operations significantly following Russia’s annexation of Crimea in 2014.

Big number: $121 billion

That’s roughly the amount international banks owe Russian entities, according to recent data from the Bank for International Settlements. US banks owe nearly $15 billion, while European banks have the highest exposure with $84 billion in total claims.

Crucial quote:

“War in Ukraine and sanctions against Russia, at a minimum, will slow the global economy – and it could easily get worse,” Dimon warned Monday.

Tangent:

Other financial institutions are also affected. BlackRock, the world’s largest asset manager, saw its funds lose an estimated $17 billion in the weeks following Russia’s invasion of Ukraine.

To monitor :

Western companies left Russia in droves after the invasion of Ukraine and the ensuing economic sanctions. Russian President Vladimir Putin has previously threatened to seize the assets of any Western companies that have suspended operations in his country, although experts predict the process would be complicated, if not invalidated by international law.

Further reading:

Russia’s war in Ukraine has created a “potentially explosive” economic situation, warns JPMorgan’s Dimon (Forbes)

Wall Street Firms Cut S&P 500 Price Targets Dramatically – Here’s What They Predict for Markets (Forbes)

This recession indicator is flashing warning signs as the Fed, war and oil threaten economic recovery (Forbes)

BlackRock CEO Larry Fink Says The Russian-Ukrainian War Is Upsetting The World Order And Will End Globalization (Forbes)

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