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European bank shares slide further; Russia’s Sberbank exits Europe -Breaking

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© Reuters. FILE PHOTO – Behind a statue honoring Soviet founder Vladimir Leninin Moscow (Russia), June 14, 2016, the Raiffeisen Bank logo is visible on the top of Raiffeisen Bank’s building. REUTERS/Maxim Shemetov

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Carolyn Cohn, Tom Sims

FRANKFURT/LONDON -European banks fell on Wednesday following two days of sharp losses. They were at their lowest level in almost 11 months as Ukraine’s crisis drags on and the European branch of Russia’s Sberbank had to shut down.

After dropping 5.6% Tuesday and 4.5% Monday, an index that tracks the top European bank stocks fell 0.6% Wednesday. This index is now at its lowest point since April. It was 27% lower than the peak in April.

On Wednesday, Russia is showing no interest in stopping the assault. Joe Biden warned Vladimir Putin “has no idea what’s ahead”. Russia refers to its actions against Ukraine as “special operations”.

Austria’s Raiffeisen Bank International was one of the most heavily affected bank shares. Two people familiar with the matter said to Reuters that the bank is looking at leaving Russia. It would also be the first European bank to leave Russia since the invasion of Ukraine.

Raiffeisen shares are less than half of what they were a month earlier, and the share price was 5.2% down.

Markets may be reassured by some officials. According to Hungary’s central bank, the capital position of OTP Bank, the largest central European independent lender and bank, is very good and it can withstand market shocks from Russia and Ukraine.

ING was flat following a 4.8% increase at the open. Societe Generale, (OTC:), was down 1.1%. They both have an presence in Russia.

RUN ON DEPOSITS

The European branch of Russia’s largest lender Sberbank was shut down overnight by the European Central Bank. It had been warned that it would fail due to run-on deposits following the invasion of Ukraine.

Sberbank reported record profits for 2021 and said it would be leaving Europe because its European subsidiaries faced significant cash outflows, as well as threats to employees’ safety.

Sberbank had assets in Europe worth 13 Billion euros (14.41 Billion) as of Dec. 31, 2020.

Russia announced Tuesday that it would temporarily restrict foreign investors seeking to leave Russia’s assets. This was in response to investor withdrawals triggered by the crippling Western sanctions.

However, investors continue to lose assets. Aviva (LON 🙂 Chief executive Amanda Blanc announced Wednesday that the fund management unit at LON will dispose of Russia’s small exposure.

Financial institutions are trying to cope with this situation.

France’s BNP Paribas said that it is working hard to keep its operations at Ukrsibbank in Ukraine, where there are close to 5,000 people.

According to a member of the board, the German Commerzbank task force (DE:), that has a Russian subsidiary, meets multiple times per day.

Hiscox’s CEO Aki Hussain said that insurance from Lloyd’s of London provided protection for Ukrainian businesses.

We insure the offices as well as some staff. Over the past eight weeks, we have been closely working with clients and effectively helping them to leave the country.

($1 = 0.9022 euros)

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