Europe’s Banks Find Breaking Up With Russia Is Hard to Do
The ECB is stepping up pressure on lenders to speed their exit from the country.
Two years after Russia’s full-scale invasion of Ukraine, big European lenders continue to operate hefty, increasingly profitable units in the country despite public pledges to wind them down. The combined head count of the five European Union banks with the largest Russia operations has fallen by just 3% since the invasion, and earnings have roughly tripled, thanks to the fat interest rates they’re getting on their piles of cash stuck in the country.
The slow pace has spurred the European Central Bank to press the laggards to hasten their departures. One worry is that a continued presence in Russia risks exposing the banks to US sanctions and heavy fines, according to a person familiar with the matter who asked not to be named because the information is private. The watchdog has asked all banks with sizable businesses in Russia “to speed up their de-risking efforts by setting a clear road map for downsizing and exiting,” Claudia Buch, the central bank’s top oversight official, told euro-zone finance ministers on May 13.