Sinead, Matt Scuffham and Megan Davies

LONDON/NEW YORK -Global Banks, Citigroup Inc (NYSE:), JPMorgan Chase & Co (NYSE:) and Societe Generale (OTC:) face pressure to commit to remaining as custodian banks in Russia, as rivals and funds fret they may lose services critical to future investment in the country.

Reuters spoke to three financial institution executives, bankers, and traders who said that they sought or were looking for reassurances from clients regarding each bank’s long term plans. This includes clearing, settling, and protecting billions in Russian investments.

For a fee, Custodian Banks have departments which look after clients’ assets.

A source from London’s banking said that they had been in regular contact with Citibank Moscow senior executives to discuss the state of their custodian company.

Sources said that their client was not yet ready to trade Russian Equities once the Moscow Exchange (MOEX reopens), but needed the assurance of having a Western custodian.

The source claims that Citigroup executive said they would continue to serve clients until sanctions are lifted.

Citi sources say that the bank is used by major U.S. businesses and other international companies in Moscow. Cutting off these customers would cause damage to client relationships. Another banker stated that it was crucial for the industry that Citi (a major player) continue to be present in Moscow.

Citigroup did not respond to our request for comment.

According to a second New York-based banker, the source said that he sought assurances that SocGen would “keep on the ground” in order for his bank to meet its client custody obligations. According to the source, executives at SocGen gave assurances they would at least for the short term.

Citigroup and SocGen (the French parent of Rosbank) have announced plans to drastically reduce operations in Moscow under a broad program of Western sanctions. This is in response to Russia’s invasion of Ukraine.

Both banks stated that they would assist their clients in the difficult task of reducing or unwinding Russia exposures. Withdrawals will be slow.

However, neither of them has released a statement about the long-term state of their custodian services. This leaves some clients unsure what the future holds.

SocGen spokeswoman, in an email, stated that they were “conducting their business in Russia with extreme caution and selectivity while supporting historical clients.”

SocGen is “strictly adhering to all applicable laws, regulations, and diligently implements the necessary measures in order to enforce international sanctions strictly as soon as possible after they become public.”

It declined to discuss specifically its Russia custody business.

JPMorgan Chase & Co also provides similar custody services from its Moscow outpost. According to an insider familiar with the situation, clients have asked for assurances that their custody services will be continued. It previously stated it would continue to act as a custodian for clients.

Bank of New York Mellon Corp. (NYSE:) Corp. has stated it will also continue providing custodian service in Russia.

STOP!

Many Western investors who hold Russian bonds or stocks would be forced to find another bank to store them if Moscow banks decided to close their Moscow custody offices. Others looking to take advantage of a rally in the economy or financial markets after sanctions have been lifted might not be able to do so.

SocGen in France, the third largest bank by assets, warned its stakeholders that in an “extreme scenario” it might lose its rights to Russia’s business.

Citi had initially stated that it would continue to operate its Russian business in an “limited” manner following the conflict, which President Vladimir Putin called “a special military operations.”

However, it stated that it will accelerate and extend the retreat’s scope by renoncing to Russian wealth and institutional management clients.

According to a source, Moscow-based custody staffs offer transaction services in addition to language translations for central bank documents. These add-ons are highly sought-after by Western clients.

Separately, Russia’s central banking stated Wednesday that stock market trading will resume on Thursday. 33 securities are set to trade on the Moscow Exchange during a short period and no short-selling is allowed.

It is becoming more difficult for banks to fulfill their Russian client obligations. The one-month anniversary since the invasion falls this week, making it even harder.

Russia has imposed strict rules on foreigners who want to purchase and sell Russian assets, including securities.

A New York-based banker said that the job of checking clients’ compliance with securities sanctions was a “logistical nightmare”. He also stated that his company had recently hired 20 compliance personnel.

Company statements reveal that global companies, investors, and banks have disclosed nearly $135 trillion in Russian exposure.

The most up-to-date portfolio data shows that U.S. asset management firms, including Vanguard, Capital Group Companies Inc and American Funds Franchise, are also reporting large exposures in excess of billions of Dollars.