Tassilo Hummel, Tom Sims

PARIS/FRANKFURT – Societe Generale warned Thursday that Russia might take over its bank’s local operations. This is one of the most severe warnings by a Western company regarding the possible impact of war in Ukraine.

French lender, with a Russia exposure of $20 billion, is among the biggest foreign lenders. It said it was working hard to minimize risks. European banks are reviewing their business in Russia amid the West’s increasing sanctions.

Societe Generale stated that the group had more than enough protection to absorb any extreme situation in which it would lose its Russian banking assets.

According to a spokesperson, Intesa Sanpaolo, Italy’s largest bank, has been conducting a review of its Russian presence following the invasion of Ukraine.

The fear of writedowns, lower income, and possible sanctions have all contributed to bank share losses. On Thursday, their stocks were mostly lower.

Two sources close to the situation say that regulators are considering closing the European branch of Russia’s second largest bank VTB Bank. This is in response to growing concern about the effects of Western sanctions.

VTB would become the second bank to fail in Europe if regulators decided to shut it down. This is due in part because of sanctions that have squeezed Russia’s lenders. Sberbank (Russia’s biggest bank) announced earlier in the week that it would close most of its European operations.

A mid-day decline of 0.5% was recorded in an index that tracks the top European bank stocks. This follows small gains made on Wednesday but not enough to offset sharp losses early in the week.

The trading occurred on Thursday as Ukraine invaded its second week and one day after Moscow claimed that it had captured Kherson, a Black Sea port. Russia refers to its actions against Ukraine as “special operations.”

Societe Generale has seen its profits in Russia drop to almost 3% as the conflict intensifies. The shares of Societe Generale traded 1.7% higher but have fallen around 20% over the past year.

The group stated, “The group conducts its business in Russia using the greatest caution and selectivity while supporting its historic clients.”

The priority is to reduce the risks of the subsidiary and maintain liquidity by maintaining a diverse deposit collection, it said.

In recent times, many investors have tried to sell Russian assets.

Fitch Ratings Agency (NYSE) has downgraded Russia to “junk” status by Moody’s (NYSE). This is because Western sanctions have made Russia’s ability and potential for default more difficult.

Citigroup Inc (NYSE 🙂 is facing losses in the Russian market of several billions of dollars. It has been helping 200 of its employees to leave Ukraine following Russia’s invasion of Crimea, said executives on Wednesday.

According to the bank, Russia’s total exposure was nearly $10 Billion at the end last year. This figure is much higher than what had been previously reported.

It London Stock Exchange According to Group (LON): Financial sanctions against Russia will have minimal impact on the company’s business since it has suspended additional Russian listings.

David Schwimmer, CEO LSEG said that trading was suspended in 28 Russian listings by the exchange on Thursday. This included energy giants Rosneft (MCX;) and Gazprom(MCX:). Also, the biggest lender to Russia Sberbank.

Helaba German Bank said that on Thursday, it wouldn’t make any profit predictions for 2014 due to uncertainty caused by Russia.