Loans to Russian soldiers prompt European banks to go out of business – #Loans #Russian #soldiers #prompt #European #banks #business

BERLIN/LONDON, Feb 13 (Reuters) – To the soldiers fighting in Ukraine credit Russia’s scheme to grant payment holidays and write off all debts if banks die or go bankrupt has added to the mounting pressure on remaining overseas creditors. Leave in Russia.

Moscow’s “special” in Ukraine military Although almost a year has passed since the start of the operation, which he called “operation”, Austria’s Raiffeisen Bank International ( RBIV.VI ) and Italy’s UniCredit ( CRDI.MI ) are a few Europe bank is still making money in Russia.

Loan reduction scheme only of Ukraine not only has it drawn criticism from its central bank, which has asked Raiffeisen and other banks to stop doing business in Russia, but also from investors worried about any reputational impact.

Raiffeisen and UniCredit are both deeply rooted in Russia’s financial system and the central bank’s 13 “systemically important credit organization” is the only foreign bank on the list, which is their fight against extensive Western sanctions Russia emphasizes its importance for the economy.

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Their the president Vladimir Putin at a critical time for Russia role in supporting the economy has prompted some investors to go public with their doubts.

“Companies should be very careful,” says Norway’s KLP pension Foundation’s Kiran Aziz warned of the huge risk that banks could be used to “finance war in other ways”. KLP funds own shares in both Raiffeisen and UniCredit.

About the pay holiday in September law while passing through the parliament, the influential speaker of the lower house Vyacheslav Volodin his Russia clearly stated its importance for

A soldier and officers keep our country safe and we need to make sure they are taken care of.

300 in Management billion from euro (320 billion dollars) said Erik Christian Pederson of Nordea Asset Management, who is also concerned about Raiffeisen and UniCredit’s presence in Russia and has raised it with them.

Requiring banks to give paid leave to soldiers “shows the dangers of operating in jurisdictions where companies can be forced to act in direct conflict with their corporate values,” he said.

“We feel that it is right for companies to withdraw from Russia, given the unwarranted attack on Ukraine,” Pederson said. Refinitiv data shows that Nordea owns shares in UniCredit.

According to the Central Bank of Russia, banks from September 21 to the end of last year military restructured 167.6 thousand loans for employees or their family members with a total value of more than 800 million euros.

Raiffeisen says that only 0.2% of Russian loans are “placed by the government credit moratorium” and said that this amount is “negligible”. The bank has been in Russia for more than 25 years, including companies in total 9 billion has a loan of about EUR.

It made a net profit of around €3.8 billion last year, much of it thanks to a €2 billion plus profit from its Russian business.

Approximately 20 UniCredit, which entered the Russian market when it bought an Austrian bank a year ago, said that this rule “according to the federal law… for all banks mandatory” and refused to say how many loans were forgiven.

The Italian bank added that its business in Russia is focused on companies rather than individuals. UniCredit last year 20 more than 1 billion euros of the total income of more than one billion euros fell to Russia.

But despite the initial sharp fall, UniCredit’s shares are now markedly higher than before Russia deployed troops to Ukraine on February 24 last year, while Raiffeisen’s more limited free float has not been restored.

A spokesman for Swedbank Robur, one of Scandinavia’s top investors, said: “Taking any profit in an ongoing war is not acceptable or consistent with our thinking about responsible investment,” adding that reputational risk was a concern.

Swedbank Robur said it has stakes in both banks, but did not disclose figures.

Larger institutional investors, including France’s Amundi and Norway’s sovereign wealth fund, which advocate responsible investing, declined to comment when asked for their views.

Is the window closing?

Some foreign banks responded relatively quickly.

France’s Societe Generale ( SOGN.PA ) cut ties with Russia in May by selling Rosbank ( ROSB.MM ) to businessman Vladimir Potani’s Interros Group.

A person familiar with the matter said that the continued presence of Europe’s two largest banks Europe It attracts the attention of regulators at the Central Bank (ECB).

Andrea Enria, the ECB’s chief supervisor, said the window for an exit was “closing a bit” because of a more “hostile” approach from Russian authorities. But he also expressed his support for any bank that wants to reduce or exit its business there.

Raiffeisen and UniCredit confirmed that they are in discussions with the ECB regarding Russia.

UniCredit said it kept the ECB “fully and regularly informed of our strategy to systematically mitigate our exposure to Russia”.

But Raiffeisen, which has yet to make money, more than tripled profits from its Russian business last year.

Meanwhile, Russian depositors with less risk of sanctions funds place to sleep offer bank that does 20 over a billion euros funds they gave

This means that, despite regulatory pressure, there is little incentive for banks to leave Russia.

Eastern Europe and in Austria, which has close historical and economic ties to Russia, politicians are silent on the continued Russian presence, which has prompted protests outside Raiffeisen’s headquarters in recent months.

Raiffeisen CEO Johann Strobl said he was exploring options for the Russian business, although he noted that any move would be complex, having previously said the bank was not a “sausage stand” that could close overnight.

For some, the question is more about spirituality than money.

Heinrich Schaller, head of RBI’s third-largest shareholder Raiffeisenlandesbank Oberoesterreich and deputy chairman of Raiffeisen, is among those who have expressed doubts about staying.

“Of course, it’s a moral issue,” he said recently. “There’s no doubt about it.”

Regardless of what shareholders say, Putin’s decree will likely make it more difficult to exit Russia. He forbade investors from the so-called unfriendly countries to sell shares in banks unless the Russian president made concessions.

($1 = 0.9376 euros)

Supplement by Alexandra Schwarz-Goerlich in Vienna and Tom Sims in Frankfurt report; Written by John O’Donnell; Edited by Alexander Smith

Our standards: Thomson Reuters Trust Principles.

2023-02-13 10:33:45
Source – reuters

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