Tom Sims & Iain Withers

FRANKFURT/LONDON (Reuters – Europe’s financial system scrambled after Russia invaded Ukraine on Thursday, with Allianz (DE) revealing it had frozen Russian government bonds and Lloyds (LON) announcing it was “heightened alert” for cyberattacks.

Deutsche Bank (DE:). The company claimed that it has contingency plans and European officials warn of the possibility of new sanctions.

Morning trade saw shares in the top banks fall. The Euro Stoxx Index was 6.1% lower than the index of European bank stocks before noon. This is more steeply than the 4% drop in Euro Stoxx.

Banks that have significant Russian operations were especially hard hit. Societe Generale lost 8.6%, and Austria’s Raiffeisen Bank International was down 16%.

UniCredit shares, which have a Russian arm, were down as high as 9% before an automatic suspension of trading was triggered.

Russian forces fired missiles on several cities of Ukraine earlier in Thursday and then landed troops at its coast. Officials and media reported that this was in response to President Vladimir Putin’s authorization for a military operation in eastern Ukraine.

Data from the Bank for International Settlements reveals that European banks are more exposed than U.S. ones to Russia. This is especially true for banks in France, Italy, and Spain.

Bank exposure to Russia – https://graphics.reuters.com/UKRAINE-CRISIS/zjpqkaowapx/chart.png

BaFin in Germany said it was monitoring the crisis closely.

Senior officials announced that the European Union will place new sanctions against Russia. They will freeze its assets and stop its access to the European financial markets.

Multiple EU sources stated that while this will provide some relief for Europe’s banks it is unlikely that the European Union would take action to eliminate Russia from SWIFT, the global interbank payments network.

Deutsche Bank, Allianz and a number of Europe’s top financial companies with Russia operations both stated that they would comply with the sanctions.

Allianz Asset Management, one the most powerful asset managers worldwide, stated that Russia’s government bonds made up a small portion of its portfolio. The company also said it has recently instituted a ban on these securities.

Like many lenders over the years, Deutsche Bank reduced its presence to Russia because of increased sanctions.

The bank stated that they have prepared contingency plans. Un spokesperson refused to provide further details. Deutsche blue chips experienced the worst declines with shares of the lender falling more than 7.4%.

Charlie Nunn, chief executive of Lloyds, told reporters it was “on heightened alert…internally around our cyber-risk controls and we have been focused on that for quite some time.”

Nunn stated that preparations for cyberattacks were discussed during a meeting with the leaders of both the banking and government sectors about Russia.

Nunn stated that Lloyds has been “on heightened alert” for the last few months.

The RBI said this month that it has earmarked 115m euros for sanctions against Russia. It also stated that on Thursday it was too early to evaluate the effect on its business.

Intesa Sanpaolo, an Italian heavyweight (OTC) that has financed large Russian investment projects such as the Blue Stream’ gas pipeline and the sale of a stake at Rosneft oil producer Rosneft was 7.3%.

Although many bankers may have downplayed Russia’s importance to their businesses, Russia has a strong connection to the European economic system.

With a 5.5% trade share, Russia is fifth largest trading partner of the European Union, according to data. Less than 1% of the total trade between the United States and Russia comes from American commerce.

Some top regional bankers were more worried about possible secondary effects.

HSBC’s boss said that the “wider contagion of global markets” was a problem, even though there is a limited amount of direct exposure.