The Exposure of US Banks to Russia Is Unknown; There Is a Risk of Long-term Consequences. – Experts

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Reuters, NEW YORK, March 1 – Investors may not fully understand US banks’ exposures to Russia as a result of a lack of transparency in disclosures thus far, and banks that earn a significant portion of their revenue from international operations may suffer in the long run, analysts said.

US banks have disclosed a total exposure of $14.7 billion. In comparison to Italian, French, and Austrian banks, which have a combined exposure to Russia of just over $42.5 billion, US banks appear to be less vulnerable.

Citigroup, on the other hand, surprised analysts on Monday by revealing that its total exposure to Russia was nearly $10 billion, significantly higher than previously disclosed. continue reading

The revised figure included cash held by the Bank of Russia and other financial institutions, reverse repos, and other exposures to Russian counterparties.

Citigroup’s revised total prompted speculation that other banks may have greater exposures than previously disclosed.

 

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In a research note published Tuesday, JPMorgan analyst Kian Abouhossein stated that “transparency regarding banks’ exposure to Russia is generally low.”

“The majority of banks do not disclose net exposures and do not provide granularity around gross exposures,” Abouhossein wrote, adding that the risk of US banks being exposed to derivatives and the impact of sanctions on their wholesale payments businesses are unknown at the moment.

Only a few US banks have quantified their exposure to Russia.

Along with Citi, Goldman Sachs Group Inc (GS.N) reported a net exposure to Russia of $293 million and a total market exposure of $414 million as of December 2021, according to its most recent filing.

Bank of New York Mellon Corp (BK.N) stated that its exposure to Russia is less than $100 million.

JPMorgan Chase & Co (JPM.N), Bank of America (BAC.N), and Wells Fargo & Co (WFC.N), which round out the top four largest US banks, did not include Russia in their most recent filings as one of the top twenty countries to which they have the most exposure.

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Morgan Stanley’s (MS.N) exposure has not been disclosed.

While US banks appear to have less financial exposure to Russia than their European counterparts, Citi analyst Ken Usdin believes they may experience more indirect effects on their businesses due to the size of some global businesses.

Citi, JPMorgan, and trust banks such as State Street Corp (STT.N) may face such an impact as a result of their extensive global revenue exposure, Usdin said.

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