European Banks Race to Spell Out Russia Risks as Stocks Plummet

(Bloomberg) -- European banks’ risks in Russia and Ukraine are becoming clearer by the day as more lenders give details on their loans and commitments.

While Raiffeisen Bank International AG, Societe Generale SA and UniCredit SpA were quickly identified as having the most to lose, more than a dozen big eurozone banks have meaningful operations in Russia. France’s Credit Agricole SA on Monday became the latest firm to outline its vulnerability, detailing 6.4 billion euros ($7 billion) in exposure.

Banks are the biggest losers on the Stoxx Europe 600 Index over the past month and were among the worst performers again on Monday as concern over the impact of sanctions intensified. Raiffeisen, which has the biggest exposure to Russia relative to its financial reserves, has led declines among lenders this year with a 57% slump.

Read also: Europe’s Banks See Recovery in Tatters After Blow from Sanctions

Bloomberg previously reported that lenders are preparing for defaults on loans and even the possibility of exiting their Russian business. While banks say they could digest such costs, the detriment to the wider economy has pushed back the prospect of higher interest rates which would buoy their earnings.

“You’ve seen an extreme price reaction,” said David Herro, chief investment officer for international equities at Harris Associates. “Yes there is exposure, but it’s relatively small. At this stage, the bigger impact causing the lower prices I believe has been the weakening of interest rates.”

Harris Associates has investments in European banks including Intesa Sanpaolo SpA, which said last week that its Russian operations are “under strategic review.” 

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