UniCredit and BNP Paribas detail heavy exposures to Russia as sector rebounds


A UniCredit logo is sen in downtown Rome, May 10, 2016. REUTERS/Tony Gentile/

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  • UniCredit and BNP detail multi-billion euro Russian exposures
  • BNP cuts IT staff based in Russia and strengthens cyber defenses
  • S&P Global is the latest to suspend business operations in Russia
  • European bank stocks rebound in broad ‘relief rally’

MILAN/LONDON, March 9 (Reuters) – Italy’s UniCredit and France’s BNP Paribas were the latest banks to expose their exposures to Russia, warning of billions of euros in potential costs from the financial fallout from the Moscow’s invasion of Ukraine amid broader sector rebound Wednesday.

Banks, insurers and asset managers have scrambled to distance themselves from Russia and assess their exposures after Moscow was hit with heavy sanctions by the West following the invasion of its neighbor which started last month.

BNP Paribas has also cut its Russia-based workforce from its internal IT systems as it seeks to strengthen its defenses against any potential cyberattacks, a source with direct knowledge of the matter told Reuters.

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The French lender is believed to be the first major bank to exclude Moscow staff from its computer networks. Read more

The European Union on Wednesday agreed new sanctions against Russia and its ally Belarus that blacklist 14 other oligarchs and freeze relations with Belarus’ central bank and three major lenders there. Read more

Financial information provider S&P Global has added itself to the growing list of companies suspending business operations in Russia, a day after Britain’s London Stock Exchange Group halted some services in the country.

Italy’s second-biggest bank, UniCredit (CRDI.MI), said late Tuesday that a full write-off of its Russian business would cost it about 7.4 billion euros ($8.1 billion). Read more

BNP Paribas (BNPP.PA) said it had total exposure of around 3 billion euros ($3.3 billion) to Russia and Ukraine, which it said was relatively limited.

Shares of major European financial companies have fallen sharply since Russia’s invasion of Ukraine, as investors spooked at some’s ties to Russia and braced for a potential broader economic downturn.

UniCredit said a pessimistic scenario would cut its capital adequacy ratio by two percentage points, but would still stick to its dividend and share buyback plans.

Shares of UniCredit jumped 15% and BNP Paribas 10%, with the broader STOXX index of European banks rising 7% on the day (.SX7P), recording a partial rebound from recent falls.

Analysts suggested that the rebound in European stock markets on Wednesday could be a temporary relief. Read more

The European Banks Index (.SX7P) has fallen 15% since the invasion began on Feb. 24, compared to just 5% for the benchmark STOXX (.STOXX).

Struggling European banks entered 2022 on a wave of optimism not seen in more than a decade, but investors and analysts warned that the Ukraine crisis may have hit that flat. Read more

Credit Suisse economists cut their European growth forecast on Wednesday and now expect the region to grow just 1% this year as the Ukraine crisis drives up commodity prices and disrupts supply chains. Read more

Among European banks, Raiffeisen Bank International in Austria (RBIV.VI) and Societe Generale in France (SOGN.PA) have the most exposure to Russia. read more Stocks in both rallied strongly during the day amid a broader rebound.

WITHDRAWAL

S&P Global has joined rival rating agencies Moody’s and Fitch in suspending business operations in Russia.

The move comes as the London Stock Exchange Group suspended from 12:00 GMT the supply in Russia of products containing information and commentary, as well as all new sales of products and services. LSEG stated that data products will continue to be available to customers currently served. Read more

LSEG distributes Reuters news and commentary as part of its products. Thomson Reuters (TRI.TO), the parent company of Reuters News, has a minority stake in the LSE.

A new Russian law makes it possible to imprison journalists who report any event likely to discredit the Russian army.

Two of the world’s largest insurers, UK-based Prudential (PRU.L) and Legal & General (LGEN.L), said on Wednesday they each had very small exposures to Russia and did not expect not increase them.

Financial firms have also braced for other potential war-related risks, with regulators working closely with companies to prepare defenses against the threat of cyberattacks.

Swiss stock exchange operator SIX said it saw an increase in hacker attacks at the start of the invasion, but said it had since declined. Read more

($1 = 0.9123 euros)

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Reporting by Valentina Za in Milan and Sinead Cruise and Iain Withers in London, Additional reporting by Sudip Kar-Gupta in Paris, Niket Nishant in Bengaluru, Carolyn Cohn and Huw Jones in London, Selena Li in Hong Kong; Editing by Alexander Smith and Elaine Hardcastle

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