SocGen fears confiscation of Russian assets as banks brace for worst

PARIS/FRANKFURT, March 3 (Reuters) – Societe Generale (SOGN.PA) on Thursday warned against the possibility that Russia could strip the bank of its local operations, in one of the strongest warnings to date. a Western company on the potential impact of the war in Ukraine.

The French bank, whose $20 billion exposure to Russia is one of the largest among foreign lenders, said it was working to reduce risk in the country as European banks examine affairs there amid escalating reciprocal sanctions with the West.

“The group has more than enough leeway to absorb the consequences of a potential extreme scenario, in which the group would be stripped of ownership rights to its banking assets in Russia,” Societe Generale said. Read more

Italy’s biggest bank Intesa Sanpaolo (ISP.MI), meanwhile, is conducting a strategic review of its presence in Russia following Moscow’s invasion of Ukraine, a spokesman said. read more Citigroup also warned of losses.

Bank stocks have been battered in recent days amid fears of possible writedowns, lower earnings, weaker economies and sanctions fallout. Their shares mostly traded lower on Thursday.

Regulators are also bracing for a possible shutdown of the European branch of Russia’s second-largest bank, VTB Bank (VTBR.MM), amid growing concerns over the impact of Western sanctions on the bank, two sources told folder. Read more

If regulators decide to close VTB in Europe, it would mark the second failure of a major Russian bank in the region, with sanctions pressing the country’s lenders. Sberbank, Russia’s largest bank, announced earlier this week that it was closing most of its European operations. Read more

Many investors have tried in recent days to sell their Russian investments.

The Russian assets of Norway’s $1.3 trillion wealth fund, the world’s largest, have become worthless and selling them under government instructions will take time, the fund’s CEO said on Thursday. Read more

Ratings agencies Fitch and Moody’s downgraded Russia six notches to junk status, saying Western sanctions cast doubt on its ability to service debt and weaken its economy. Read more

An index of major European banking stocks (.SX7P) fell 0.2% in afternoon trade, after small gains on Wednesday that made only a small dent in steep losses earlier in the day. the week.

Thursday’s exchanges came as the invasion of Ukraine entered its second week, and a day after Moscow claimed to have captured the Black Sea port of Kherson. Russia calls its actions in Ukraine a “special operation”. Read more

Societe Generale, which makes nearly 3% of its profits in Russia, is one of the banks under pressure in the face of the escalation of the conflict. Its shares have traded up 1.7%, but are down about 20% year-to-date. Read more

“The group conducts its activities in Russia with the greatest caution and selectivity, while supporting its historical customers”, he specifies. Read more

The priorities are “to reduce its risks and preserve the liquidity of its subsidiary by maintaining a diversified collection of deposits”, he added.

Citigroup Inc (CN) could face billions of dollars in losses in its Russian business and is helping some of its 200 employees in Ukraine leave the country after the Russian invasion, executives said Wednesday. Read more

The bank’s total exposure to Russia stood at nearly $10 billion at the end of last year, it said on Monday, far more than previously reported.

The London Stock Exchange Group said applying financial sanctions to Russia would only have a minor impact on its business as it suspended more Russian listings. Read more

LSEG CEO David Schwimmer said the exchange on Thursday suspended the listing of 28 Russian companies, including energy giants Rosneft and Gazprom as well as the country’s biggest lender, Sberbank.

German bank Helaba said on Thursday it would refrain from making a concrete profit forecast for the year given the uncertainty posed by the situation in Russia.

Reporting by Tom Sims, Tassilo Hummel, Gianluca Semeraro, Valentina Za, Frank Siebelt, Huw Jones and Gwladys Fouche; edited by Mark Potter

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