European bank stocks plunge in Russian-Ukrainian conflict
Shares of European banks tumbled amid a selloff in global equities on Feb. 24 following Russia’s launch of military operations in Ukraine.
Among the major foreign lenders with operations in Russia, Austrian bank Raiffeisen Bank International AG suffered the biggest drop with its shares down 25% towards the close of trading. Nearly 30% of the bank’s branches are in Russia and Ukraine, according to data from S&P Global Market Intelligence.
An RBI spokesperson told Market Intelligence that it would be premature at this time to assess the economic impact of the situation, but its operations in both countries are “well capitalized and self-funding”. RBI has already made provisions, increased its hedging against the Russian ruble and implemented a hedge against the Ukrainian hryvnia as part of its forward-looking risk policy, the spokesperson said.
Shares of French bank Societe Generale SA were down 12.3% late in the afternoon. The group has 518 branches in Russia through its PJSC Rosbank unit, representing just over 11% of its total branch network in Europe.
SocGen is closely monitoring the situation at all levels and its Russian unit “continues to operate in a normal manner,” the group said in a statement.
Shares of the Hungarian bank OTP Bank Nyrt.which has 182 branches in Russia and 132 branches in Ukraine, fell nearly 15% on Feb. 24.
The bank will activate its emergency scenarios depending on how the situation develops and close branches deemed unsafe, a bank spokesperson said. He added that while the bank’s “presence in Ukraine is significant, the group has a strong capital and liquidity position to absorb potential losses from this situation.”
Other banks exposed to Russia include Julius Bär Gruppe AGdown 6%, and UniCredit SpAwhose shares fell more than 12% in Milan.
Julius Bär and UniCredit did not immediately respond to requests for comment. UniCredit told Reuters its Russian unit had a “very liquid and self-funding” balance sheet and its bad loan coverage was very high.
Following the escalation of tensions early on February 24, the Moscow Stock Exchange suspended trading in all its markets but resumed activity a few hours later at 10:00 a.m. Russia’s central bank has introduced support measures to help domestic financial institutions adjust to higher volatility. .
The Moscow-traded shares of Russia’s two largest lenders, Sberbank of Russia and VTB Bank PJSC, closed the day down 45.9% and 40.5%, respectively. Sberbank, whose securities traded on the London Stock Exchange closed down 72.3%, said in a statement that it was ready for any development and that its systems were operating normally.
British Prime Minister Boris Johnson later said on February 24 that all major Russian banks would face a full asset freeze, after Sberbank and VTB escaped Western’s first round. punishments. The United States has signaled that it will be targeted if Ukraine is invaded.
Russia’s latest moves prompted Ukrainian President Volodymyr Zelenskyy to declare martial law across the country. Ukraine’s central bank has passed a resolution ordering banks operating in the country to ensure uninterrupted operations and unrestricted access to liquidity, as well as to suspend the operation of its foreign exchange market and prohibit currency withdrawals, among other things measures.
Polish bank PKO Bank Polski SA said on Feb. 24 that it would most likely face additional credit write-offs in its Ukrainian operations due to the dispute.