Global finance grapples with Ukraine crisis as stocks tumble

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  • Bank stocks slide; Austrian RBI down 19.5%
  • British Lloyds on high alert for cyberattacks
  • US bank stocks fall sharply at open
  • German market regulator monitors crisis
  • US and European officials warn of new sanctions

FRANKFURT/LONDON/NEW YORK, Feb 24 (Reuters) – Financial firms from Frankfurt to Wall Street suffered sharp price falls on Thursday as they grappled with the impact of shock waves from the Russian invasion of Ukraine.

Deutsche Bank (DBKGn.DE), Germany‘s biggest lender, said it had contingency plans in place as US and EU officials warned of new sanctions on Moscow. Read more

Britain’s Lloyds bank said it was on ‘high alert’ for cyberattacks, while German insurance and asset management giant Allianz (ALVG.DE) said it had frozen its exposure to Russian government bonds.

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Shares of major banks plunged after the arrival of Russian forces in neighboring Ukraine on Thursday, with the European banking sector (.SX7P) falling 7.7% by mid-afternoon, sharper than a 4 .6% for the Euro Stoxx index (.STOXXE).

Major US banks, including JPMorgan Chase (JPM.N), Citigroup (CN), Goldman Sachs (GS.N) and Morgan Stanley (MS.N), lost 3-4.5% in early trading. This is a heavier fall than the broader market, with the S&P 500 (.SPX) down 2.6%.

European banks have the most exposure to Russia, particularly in France, Italy and Spain, far exceeding the exposure of US banks, according to data from the Bank for International Settlements.

And banks with significant operations in Russia were the hardest hit after its forces invaded Ukraine by land, air and sea, in the biggest state-on-state attack in Europe since World War II. world. Read more

Austrian Raiffeisen Bank International (RBIV.VI) lost 19.5%, while shares of Societe Generale (SOGN.PA) fell 11.2%, although the French bank said its Russian unit Rosbank continued to operate normally. Read more

Shares of UniCredit (CRDI.MI) fell 12.4% and triggered an automatic trading halt, despite the Italian bank saying its “Russia exposures are heavily hedged”.

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German financial regulator BaFin said it was keeping a watchful eye on the crisis.

Some banks have arranged customer calls with experts to explain the situation, invitations seen by Reuters showed, with JPMorgan arranging one with Michael Singh, senior fellow at the Washington Institute for Near East Policy.

Goldman Sachs has launched a call for its private wealth clients hosted by Alex Younger, a former head of Britain’s foreign intelligence service MI6, who is now an employee of the firm.

European Union leaders will impose new sanctions on Russia, freezing its assets, blocking its banks’ access to the European financial market and targeting ‘Kremlin interests’ with its ‘barbaric attack’, senior officials say . Read more

But in what will relieve European banks, the EU is unlikely at this stage to take steps to cut Russia off from the global interbank payments system SWIFT, several European sources said. Read more

Deutsche Bank and Allianz, two of Europe’s largest financial firms and both with operations in Russia, said they were ready to comply with the sanctions.

Allianz, one of the world’s largest asset managers, said the share of Russian government bonds in its portfolio was “very small” and that it had implemented a freeze on them.

Shares of Deutsche Bank, which like many lenders in recent years have reduced its presence in Russia as sanctions have been extended, fell more than 10.2%, the largest drop among German blue chips. .

“We have contingency plans in place,” he said in a statement. A spokesperson declined to give further details, but said “the risks are well contained”.

Lloyds chief executive Charlie Nunn said the UK bank was on “high alert…internally about our cyber risk controls”, adding that preparedness for possible cyber attacks had been discussed at a meeting between government and banking sector leaders on Wednesday.

Lloyds has been on heightened alert for several months, Nunn told reporters.

RBI, which this month said it had set aside 115 million euros ($129 million) in provisions for possible sanctions against Russia, said on Thursday, as its shares fell sharply, that it was “premature to assess” the impact on its activity.

The Austrian group said its banks in Russia and Ukraine were “well capitalized and self-financing”.

Italian heavyweight Intesa Sanpaolo (ISP.MI), which has financed major Russian investment projects such as the “Blue Stream” gas pipeline and the sale of a stake in oil producer Rosneft (ROSN.MM), has fell 8.2%.

While many bankers have downplayed Russia’s importance in their operations, it is the European Union’s fifth-largest trading partner, with a 5% share of trade, the data showed.

US trade with Russia is less than 1% of its total.

Some of the region’s top bankers have become more concerned about the potential side effects of the crisis.

The boss of HSBC (HSBA.L), one of Europe’s biggest banks, said this week that “broader contagion” for global markets was concerning, even if his direct exposure was limited. Read more

($1 = 0.8951 euros)

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Additional reporting by Alexandra Schwarz-Goerlich, Lawrence White, Valentina Za, Sujata Rao-Coverley, Kane Wu and Matt Scuffham; Editing by Tomasz Janowski, Jason Neely, David Goodman and Alexander Smith

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