EThe Central Bank of Russia asked banks to submit a plan in case of the introduction of anti-Russian sanctions, the regulator was separately interested in what European banks would do in case of disconnection of Russian financial organizations from the SWIFT system. FT writes that the ECB wants to make sure that banks are able to comply with possible sanctions
The European Central Bank has warned European financial institutions represented in Russia about the risks that sanctions carry for them in the event of Russia’s invasion of Ukraine, the Financial Times writes, citing sources. The Central Bank asked the banks to inform how they would act in this case.
In particular, the regulator is interested in what actions banks will take if Russian organizations are cut off from the SWIFT system. “Inquiries [to banks] show that the ECB wants to make sure that European banks can comply with any sanctions regime and are able to quickly terminate relations with clients with whom they are prohibited from dealing,” the newspaper writes.
The most significant risks associated with possible sanctions are borne by banks with a large Russian presence, for example, American Citi, French Societe Generale, Austrian Raiffeisen and Italian UniCredit. The regulator also requested information about the risks associated with Russia and Ukraine from Deutsche Bank of Germany and ING of the Netherlands.
RBC has contacted the above-mentioned financial institutions for comment.
According to the Financial Times, citing data from the Bank for International Settlements, Russian legal entities and individuals owe international banks, including their Russian subsidiaries, about $121 billion. In addition, $128 billion is stored on deposits.
The greatest risk is borne by the bank Societe Generale— €2.6 billion, the newspaper cites JPMorgan information. The risk for Raiffeisen is €1.9 billion, UniCredit— €1.4 billion.
A member of the management of one of the banks told the Financial Times that the main “systemic risk” arising from sanctions is related to Russia’s disconnection from SWIFT. According to him, this could have an impact on the entire Russian banking system. In addition, he sees an additional risk for European banks in the fact that the conflict in Ukraine may weaken the ruble exchange rate and thus affect the value of shares of their Russian subsidiaries.
The fact that the US and the EU are preparing a separate sanctions package, which is planned to be activated in the event of an invasion of Ukraine, was first written by the media, and then reported by American and European officials. In particular, the US administration stated that these restrictions would be much more serious than all that had been imposed before, including sanctions after 2014.
They explained that they were considering export and financial restrictions. The Washington Post wrote that the export restriction implies a ban on the supply to Russia of goods containing electronics made using anything related to the United States (tools, software, and so on).
US President Joe Biden has also stated that he may consider imposing sanctions directly against Russian President Vladimir Putin.
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