European Banks’ Exposure to Russia: Work in Progress; Full Exit Remains the Ultimate Goal

Morningstar DBRS has released a commentary discussing European Banks’ Russia Exposure. Key highlights include:

-- European Banks have reduced their Russian exposure since the beginning of the war.

-- We expect further reductions in light of renewed regulatory pressure.

-- While financial risks are relatively contained, outstanding exposure to a sanctioned country still poses legal, operational, regulatory and reputational risks.

“We understand that Banks are exploring various options for a full-exit including the sale of their local subsidiaries, although we expect this to be a complex and lengthy process,” said Halil Senturk, Assistant Vice President from the Morningstar DBRS European Financial Institutions team. “We consider that the financial risks stemming from exposure to Russia are manageable for banks, but they remain vulnerable to risk of sanctions and fines,” he added.