European banks panicking over Russia-Ukraine crisis – reports

European banks panicking over Russia-Ukraine crisis – reports

European banks are concerned that the payment system which connects them to Russia could become a casualty of the Ukraine crisis, Reuters reported on Wednesday, citing its sources. The banks describe the potential disconnection of Russia from SWIFT as an “atomic bomb” for the industry because it would prevent the repayment of debts, it said.

According to research by JPMorgan, European banks with subsidiaries in Russia are most at risk from economic restrictions. The study said a handful of lenders, including UniCredit, RBI, France’s Societe Generale, and ING of the Netherlands, have notable exposure to the country.

Data from the Bank for International Settlements (BIS) shows Italian and French banks each had outstanding claims of some $25 billion on Russia in the third quarter of 2021. Austrian banks had $17.5 billion, while US banks were owed some $14.7 billion.

Foreign bank exposure to Russia has more than halved since the US and the EU introduced anti-Russia sanctions in 2014, BIS data shows. Back then, the SWIFT international payment system had refused to consider delisting Russia from its services in response to calls it had received.

However, the renewed threat to cut Russia from the payment network, which handles global financial transfers and is used by more than 11,000 financial institutions in over 200 countries, is a major concern for international banks.

The short-term consequences of such a ban are opaque, and might backfire, according to Jan Pieter Krahnen, a finance expert at Frankfurt’s Goethe University and adviser to the German Finance Ministry. He told Reuters that in the long term it could lead to the establishing of a parallel mechanism that would be “a loss for the global system, and also facilitate conflicts further down the road as opportunity costs vanish.”

Heinrich Steinhauer, who represents the German lender Helaba in Moscow, explained that such a move would be tantamount to a giant debt forgiveness program by prohibiting payments. He described it as a “sort of atomic bomb,” saying “For many this would be a catastrophe. For many in the European Union and Russia, and less so for the US because economic ties are fewer.”

Experts add that financial institutions involved in swaps, futures, forwards, and other derivatives that trade with Russian counterparties could also become subject to sanctions rules. Jonathan Moss, partner at the law firm DWF, has noted that a prohibition of trading of Russian bonds in the secondary market would mean that holders of Russian bonds might be forced to sell.

European banks oppose including Russian bonds in a sanctions package, another source said.

For more stories on economy & finance visit RT's business section

Source: www.rt.com

The last notes - Экономика

most read news

#Экономика

Authorities in Warsaw have allowed citizens to forage for firewood in forests to keep their homes heated amid spiralling energy costs. Poland is in the midst of a coal shortage after banning Russian
подробнее...

If a fresh wave of government assistance is not released immediately, some 500,000 small businesses in the UK will go bankrupt within weeks, the chairman of the Federation of Small Businesses (FSB)
подробнее...

Russia has restricted the export of noble gases, including neon, in an apparent tit-for-tat response to the fifth round of sanctions imposed by the EU in April.The government decree, published on
подробнее...

India halted wheat exports this year in order to stop speculation in the grain market, Foreign Minister Subrahmanyam Jaishankar said at the GLOBSEC 2022 international security forum in Bratislava,
подробнее...

Global grain prices have fallen to April levels following Russian President Vladimir Putin’s promise to ensure the safe export of Ukrainian grain through Black Sea ports controlled by Russia.Wheat was
подробнее...

US technology firm IBM announced, on Tuesday, that it plans to pull out of the Russian market due to the conflict in Ukraine.The company's chief executive Arvind Krishna said in a statement: “Let me
подробнее...

The Biden administration might let more sanctioned Iranian oil flow into global markets in an attempt to rein in fuel prices at home amid the run-up to the midterm elections in the US, according to a
подробнее...

Ukraine is in discussions with the United States on purchasing and financing supplies of liquefied natural gas (LNG) instead of pipeline gas, which the country currently receives from EU states,
подробнее...

Gas flow from Germany to France has been halted, French gas transmission system operator GRTgaz reported on Friday, adding that the nation hadn’t received any natural gas from Russia via the pipeline
подробнее...

Authorities in Sri Lanka have suspended a court order that barred a civilian aircraft leased by the airline Aeroflot from returning to Russia, the local newspaper News First reports.An Airbus A330-343
подробнее...

The boss of Wall Street giant JPMorgan Chase, Jamie Dimon, has warned investors that the US is facing an economic “hurricane” as the latest challenges posed by the Fed’s tightening monetary policy and
подробнее...

The United States has accused the Kremlin of trying to profit from plundered Ukrainian grain by selling it to drought-stricken countries in Africa, the New York Times reported on Sunday.According to
подробнее...

US gasoline prices have once again refreshed all-time highs, reaching $4.81 per gallon on Saturday morning.According to data from the non-profit American Automobile Association (AAA), which tracks
подробнее...

Many of the currently existing 19,000 cryptocurrencies will disappear in the coming years, several industry experts told CNBC, comparing the market to the early dotcom days. According to the report on
подробнее...

A shortage of cigarette packaging paper could affect smokers in Germany, with some brands almost impossible to find in retail stores, Bild newspaper reported on Friday.According to the paper, one of
подробнее...

Business relations between the US and Russia have been damaged over the past months due to the conflict in Ukraine, and it may take years to rebuild the links between the two countries, US Ambassador
подробнее...

The authorities in Sri Lanka have grounded a civilian aircraft belonging to Russian carrier Aeroflot, and seized the plane, local newspaper News First reported on Friday.The Colombo High Commercial
подробнее...

The losses of international companies from Western sanctions on Russia have exceeded $59 billion, the Wall Street Journal reported on Friday, citing data from public statements and securities
подробнее...