December 5, 2022

Ferrum College : Iron Blade Online

Complete Canadian News World

From contagion to sanctions, European banks brace for Russian fallout

From contagion to sanctions, European banks brace for Russian fallout

A view of the City of London’s financial district as people walk over the Millennium Bridge in London, Britain, February 16, 2022. REUTERS/Henry Nichols/File Photo

Register now to get free unlimited access to Reuters.com

  • Britain announces modest sanctions package, and more may come
  • EU to set sanctions on Tuesday
  • HSBC fears ‘wider infection’
  • Reserve Bank of India (RBI) Austria has prepared crisis response plans
  • Banks in Austria, Italy and France have the most exposure

LONDON/VIENNA (Reuters) – European banks braced on Tuesday for new repercussions and sanctions after Russia ordered its forces into separatist regions of eastern Ukraine, as HSBC warned of market contagion and Austria’s Raiffeisen International Bank prepared “crisis plans”.

European banks – especially those in Austria, Italy and France – are the most exposed to Russia in the world, and have been on high alert for weeks if governments impose new sanctions on the country. Read more

The European Union is discussing banning trade in Russian state bonds and imposing sanctions on hundreds of people.

Register now to get free unlimited access to Reuters.com

“Russian aggression against Ukraine is illegal and unacceptable,” European Commission President Ursula von der Leyen wrote on Twitter. A first package of sanctions will be officially rolled out today.” Read more

Britain announced a modest package of sanctions – on five banks and three high net worth individuals – halting some of its firepower to extend its reach if the situation escalates. Read more

British Prime Minister Boris Johnson told parliament: “It is absolutely necessary that we put in reserve more strong sanctions…in light of what President (Vladimir) Putin might do next.”

See also  Airbnb announces it won't cut employee salaries if they move remotely

The United States is also preparing a package of sanctions.

In a sign of how seriously Western European leaders are taking the latest Russian moves in Ukraine, German Chancellor Olaf Schulz said he was putting on ice the certification of the Nord Stream 2 gas pipeline, an important future energy source for Europe’s largest economy. Read more

Head of HSBC (HSBA.L)One of Europe’s largest banks said on Tuesday it was concerned about the risks of “contagion” to global markets from the worsening crisis in Ukraine, although the bank’s direct exposure was limited. Read more

“Obviously there is potential for contagion or some second effect, but that will depend on the intensity of the conflict and the intensity of retaliation if there is a conflict,” Noel Quinn told Reuters in an interview.

RBI (RBIV.VI)which has large operations in Russia and Ukraine, said that while business is now normal, “in the event of an escalation, the crisis plans that the bank has been preparing for the past few weeks will come into effect.”

Shares in the Austrian bank were down 7% by 1316 GMT.

“Escalation of the conflict could have significant negative consequences,” said Dutch ING, which has a large presence in Russia.

As policymakers scramble to put in place sanctions packages, German banks said they must ensure the penalties are “accurate and unambiguous”, eliminating any room for interpretation that could make it difficult for financial firms to implement.

Details are important because failure to comply could subject you to severe penalties.

“For banks, it is important that the penalties are formulated in a way that is sufficiently precise and unambiguous, (and) do not leave any questions open for interpretation,” the German Banking Association said in a statement.

See also  Bitcoin (BTC) Price Drops Below $27,000 as Cryptocurrency Selling Intensifies

For now, the banks remain in limbo until the penalties become concrete. “We are monitoring the situation,” a spokesman for the European Banking Union said in Brussels.

Register now to get free unlimited access to Reuters.com

Additional reporting by Ian Withers and Tommy Riggiore Wilkes in London and Toby Sterling in Amsterdam; writing by Tom Sims; Editing by Kirsty Knoll, Madeline Chambers and Jean Harvey

Our criteria: Thomson Reuters Trust Principles.