Goldman Sachs and JPMorgan Chase are exiting the Russia business, and EU banks are disclosing additional exposures

Goldman Sachs Group Inc and JPMorgan Chase were the first U.S. banks to stop doing business in Russia after it invaded Ukraine, while Credit Suisse said it had 1.6 billion Swiss francs ($1.73 billion) in gross exposure to Russia at the end of last year. Goldman Sachs, which has a $650 million credit exposure to Russia, announced on Thursday that it was closing its operations there, putting pressure on rival lenders to follow suit. According to a source familiar with the situation, any losses would be “insignificant.”

JPMorgan said just hours later that it was “actively unwinding Russian business” and would not be pursuing new business in the country. The largest US bank said its operations in Russia are currently limited to assisting global clients with addressing and closing pre-existing obligations and managing Russian-related risk, as well as acting as a custodian for client assets. JPMorgan employs approximately 160 people in Moscow. In its most recent filings, the bank did not list Russia among the top 20 countries to which it has the most exposure.

In response to Russia’s invasion of Ukraine, the United States, European Union, and the United Kingdom imposed sanctions aimed at cutting off Moscow’s access to the global financial system. As the conflict enters its third week, banks, insurers, and asset managers, which rarely make political statements, have scrambled to distance themselves from Russia and assess their exposures. Credit Suisse is the latest European bank to reveal the size of potential losses, which include lending to wealthy clients as well as trade finance and investment banking exposure.

Credit Suisse is the latest European bank to reveal the size of potential losses, which include lending to wealthy clients as well as trade finance and investment banking exposure. UniCredit of Italy and BNP Paribas of France have also disclosed billions of euros in Russia risk. Banks could lose everything if Moscow seizes assets and sanctions render Russia-related securities worthless. Deutsche Bank stated that its credit-risk exposure to Russia and Ukraine was 2.9 billion euros, and that it had reduced its exposure to Russia even further in the last two weeks. Russia refers to its operations in Ukraine as a “special operation.”

While the potential losses among major European lenders are not large enough to jeopardies their stability, analysts and investors are concerned that they could derail turnaround plans and halt dividend payments to shareholders. The conflict has also potentially upended the European Central Bank’s planned interest rate increases, with policymakers expected to be divided on how to proceed and wary of making mistakes at a meeting on Thursday. Meanwhile, BNP Paribas has disconnected its Russia-based workforce from its internal computer systems in order to strengthen its defenses against any potential cyber attack, highlighting how the conflict is affecting Western financial institutions. The French bank, thought to be the first major lender to block Moscow-based employees from accessing its IT networks, has also placed employees in other locations on high alert for Russian cyber threats.