Increased financial sanctions against Russia have threatened the fate of western banks. Because they bear a fairly large credit exposure from Russia.
Based on data from the Bank of International Settlements, Italian and French banks have exposure in Russia, each valued at more than US$25 billion at the end of September 2021. Austrian banks followed with US$17.5 billion.
Austrian bank credit exposure in Russia stands at 22.85 billion euros, more than half of which is linked to the private corporate sector. Russia's central bank accounts for 8% of exposure to the country, on an entity basis at 4% and Russian banks at 2%.
The overall figure consists of 11.6 billion euros in loans or 11.5% of the group total. More than 80% of loans are in rubles. While the rest is in the form of foreign currency loans.
However, the cross-border exposure to Russia is only 1.6 billion without a parent fund from Vienna. Raiffeisen Bank International (RBI) also holds 2.2 billion euros in loans to customers in Ukraine.
To anticipate this, the cost of provision or allowance for impairment losses (CKPN) due to the impact of the Russian invasion reached 64.3% of the total RBI exposure. For now, the liquidity condition of business units in Russia is still maintained.
"We have a very strong and moderate liquidity position as we are still recording inflows," said RBI chief executive Johann Strobl.
The French bank, which operates the Rosbank unit, had 18 billion euros of overall exposure to Russia at the end of last year. The exposure value reached 1.7% of the total group.
The Dutch Bank has about 4.5 billion euros in outstanding loans to customers in Russia and about 600 million euros from customers in Ukraine out of a total loan worth 600 billion euros.
Most of these loans are in euros and dollars. The majority are for project financing and secured loans, and in most cases loans and guarantees are outside Russia or Ukraine.
As is known, Russian banks have implemented anticipatory measures to face sanctions from western countries following Russia's invasion of Ukraine.
UniCredit Bank, for example, a subsidiary of the Italy-based UniCredit Group, recorded a default value of 14.2 billion euros related to the impact of Russia which entered collectibility 3 or less in mid-2021.
Of that total, about 8 billion euros are loans made to Russia and funded locally. While the rest includes off balance sheet items and cross-border loans mainly provided by UniCredit SpA to large companies outside Russia.
UniCredit said last week its Russian franchises accounted for only about 3% of group revenue and provided accounted for 84% of bad credit exposure.
Meanwhile, Intesa's credit exposure to Russia reached 5.57 billion euros by the end of 2021, or 1.1% of the total. Its subsidiaries in Russia and Ukraine have assets of 1 billion euros and 300 million euros respectively, which together represent only 0.1% of the group's total assets.
Intesa, Italy's largest bank, handles more than half of all commercial transactions between the two countries.