Carolyn Cohn, Saeed Azar and David Henry

LONDON/NEW YORK – Banks all over the globe were easing their relationships with a number of Russian banks, as Western sanctions against Russia became effective. Meanwhile, funds and exchanges pulled back. Citigroup (NYSE) revealed billions of dollars in exposure.

On Saturday, Canada, Britain, Europe, and the United States announced new sanctions. This was in response to Russia’s invasion.

Reuters obtained an advisory notice by British banking company HSBC. It explained to staff how to use the global sanctions against Russia.

The letter, titled “Action required” and dated February 27th, highlights the fact the UK Office of Financial Sanctions Implementation authorized the “winding down of certain transactions that involve VTB Bank and certain UK subsidiary banks.” British sanctions have affected VTB Bank, Russia’s largest bank.

HSBC did not respond to our request for comment.

HSBC does not have any direct exposure to Russia. Ewen Stephenson, the Chief Financial Officer, stated last Tuesday that it had around 200 employees in Russia and that its annual revenue was $15 million. That’s a tiny fraction of its worldwide income of $50 Billion.

HSBC is the second-largest European lender and the leading global trade finance bank. Being cut off is a major blow for Russia.

VTB Capital was suspended from the London Stock Exchange. VTB Capital is now unable to trade on LSE.

Others exchanges made similar moves. Intercontinental Exchange Inc.’s NYSE and Nasdaq Inc. temporarily halted stock trading of Russia-based businesses. Sources familiar with the situation say that the halts were caused by regulatory concerns. They are seeking more information about the sanctions.

Two of South Korea’s most prominent banks confirmed Monday that, while SWIFT has not provided them with specific guidelines yet, they have stopped financing trade transactions with Russian banks.

Societe Generale in France (OTC:) stated it had “both anticipat[ed] and quickly put into effect all measures related to the new sanctions imposed” and its Russian bank Rosbank was continuing to operate in an “safe manner.”

Deutsche Bank Germany’s biggest bank (DE:), said that it has created a website for its corporate clients to deal with Russia. This website includes information about the effects of sanctions on international payments transactions and any changes.

Han-Shen Lin, senior advisor for The Asia Group said that international departments of Chinese banks will likely be closely monitoring their connections with Russian banks.

Jamie Dimon (NYSE: JPMorgan) stated that the banks are talking to the government about sanctions and added that people are worried about their unintended consequences.

Lawyers stated that clients struggled to grasp the new rules despite the fact there were many jurisdictions in play and the delay between when sanctions were announced and details being released.

“Wherever you operate, you are potentially exposed if you’re an international business to the sanctions regime of multiple different countries,” said Marcus Thompson, a London-based partner at Kirkland & Ellis. Because of the complexity and weight of the sanctions, it becomes more difficult to ensure compliance with all laws in each country where you work.

Thompson stated that “We are most likely to remain in the environment of a multifaceted and complex sanctions regime for many months or even years.”

Citi stated that the total Russian exposure of U.S. banks is close to $10 billion. The statement was made in response to questions regarding whether funds will be required to offset potential losses.

Russia was also being avoided by funds. JPMorgan Asset Management has suspended the JPM Emerging Europe Equity funds on Monday according to a source. Danske Investment, Denmark said it had also suspended trading in equity funds that have a substantial exposure to Russian stocks.

GLOBAL BANCKING

HSBC’s internal notice also listed additional sanctions imposed from Britain, the European Union or the United States. The list includes other Russian businesses subject to sanctions including VEB (development bank).

HSBC noted that the U.S. sanctions make it clear that an entity with at least 50% ownership, either directly or in indirect ways, is considered blocked. This is regardless of whether the sanction list includes the company.

HSBC stated that similar EU sanctions are in place.

South Korea’s Shinhan Bank as well as another leading South Korean bank stated that they had stopped issuing letters credit to Russian banks PSB VEB VTB Bank Otkritie Novikombank Sovcombank and Sberbank.

Due to the sensitive nature of the matter, the second South Korean bank could not be identified.

Britain stated Monday that, in collaboration with the United States, it had taken further actions against Russia, which included prohibiting any British entity from transacting with Russia’s central banking, financial ministry, or wealth fund.

Ross Denton from Ashurst, the head of international trade, stated that banks are more likely to be cautious.

“Some financial institutions do more than the law requires.”