Mapping Banks' Russian and Ukrainian Exposures
Mapping Banks' Russian and Ukrainian Exposures
Some lenders cut back after the first invasion of Ukraine. Others did not. All are poised to write down tens of billions of dollars of assets.
First things first: I recorded a podcast on Sunday with Jordan Schneider and Adam Tooze about the situation in Europe that I recommend if you have time.
As of last summer, banks headquartered outside Russia had a little more than $100 billion of direct exposure to borrowers in Russia net of risk transfers, plus nearly $50 billion in exposure through derivatives, credit commitments, and guarantees, according to the consolidated banking statistics published by the Bank for International Settlements.1 Banks in the allied countries could therefore be facing more than $100 billion of losses now that sanctions have largely cut off the Russian financial system from access to dollars, euros, yen, pounds, Swiss francs, and other major currencies. Global banks held about $11 billion of claims on Ukrainian borrowers net of risk transfers as of last summer, plus $2 billion in credit guarantees.
But it could have been a lot worse. As recently as 2013, banks headquartered in the U.S., Europe, and Japan had more than $250 billion of claims on Russian borrowers net of risk transfers, plus nearly $200 billion of other exposures. They also had about $27 billion of claims on Ukrainian borrowers, as well $24 billion of credit guarantees. Unsurprisingly, global banks reduced their Russia and Ukraine exposures dramatically after the first invasion of Ukraine and the imposition of sanctions.
Not all banking systems responded to the events of 2014 in the same way. While some lenders cut back dramatically, others did not. Even those that stayed changed the composition of their exposure in ways that have reduced their risks.