(Finance) – It is banks in Italy, France and Austria those with the increased cross-border exposure to Russia, according to data from the Bank for International Settlements, and therefore could be more exposed to geopolitical risks with an escalation of the conflict between Russia and Ukraine. Among the large listed banks, Raiffeisen Bank International (with about 20%), Societe Generale (about 4%) e UniCredit (around 4%) had the largest revenue from Russia in 2020, according to an analysis by Credit Suisse.
In 2020, RBI posted € 10.5 billion loans to Russia and Ukraine, Societe Generale reported 8.7 billion euros of loans to Russia and UniCredit 7 billion euros. “We note, however, that each of these banks reported a loan / deposit ratio in Russia well below 100%, contributing to limit exposure in extreme situations – reads the Credit Suisse report – As a percentage of total loans, the exposure is 12% for RBI and less than 2% for Societe Generale and UniCredit “.
Analysts point out that in 2014 the yield differential Russia’s 10-year over Germany has expanded from less than 6% to over 12%. Over the same period, RBI underperformed the broader banks index by 46% and SocGen by 14%, while UniCredit outperformed by 2%. “Since 2014 banks reduced risks and improved local financing of operationswith UniCredit selling its Ukrainian assets in 2016 “, it is emphasized.
“With most of the large listed European banks having limited direct exposure to Russia, let’s see the main potential threat to the sector stemming from rising energy prices which reduces growth and therefore interest rate expectations “, is the assessment of the entire sector, with valuation, potential for capital return and asset quality of European banks valued positively.