European bank stocks slumped amid a global equities sell-off Feb. 24 following Russia's launch of military operations in Ukraine.
Of the major foreign lenders with operations in Russia, Austria's Raiffeisen Bank International AG suffered the biggest decline with its shares down 25% near the close of trading. Almost 30% of the bank's branches are in Russia and Ukraine, S&P Global Market Intelligence data shows.
A spokesperson for RBI told Market Intelligence that it would be premature as of now to assess the economic impact of the situation, but its operations in both countries are "well-capitalized and self-financing." RBI has already made provisions, increased its Russian ruble hedge, and set up a Ukrainian hryvnia hedge as part of its forward-looking risk policy, the spokesperson said.
Shares of French bank Société Générale SA were down 12.3% in late afternoon trading. The group has 518 branches in Russia through its PJSC Rosbank unit, accounting for just over 11% of its total branch network in Europe.
SocGen is closely monitoring the situation at all levels and its Russian unit "continues to operate in a normal manner," the group said in a statement.
Shares of Hungary's OTP Bank Nyrt., which has 182 branches in Russia and 132 branches in Ukraine, dropped almost 15% on Feb. 24.
The bank will activate its emergency scenarios according to the changing situation and close branches where it is deemed unsafe, a spokesperson for the bank said. It added that while the bank's "presence in Ukraine is significant, the group has a strong capital and liquidity position to absorb the potential losses related to this situation."
Other banks with exposure to Russia include Julius Bär Gruppe AG, which was down 6%, and UniCredit SpA, whose shares fell more than 12% in Milan.
Julius Bär and UniCredit did not immediately respond to requests for comments. UniCredit told Reuters that its Russian unit has a "very liquid and self-funded" balance sheet and that its impaired loan coverage is very high.
Following the escalation of tensions early on Feb. 24, the Moscow Stock Exchange suspended trading in all of its markets but resumed activity a few hours later at 10:00 a.m. Russia's central bank has implemented support measures to help domestic financial institutions adjust to higher volatility.
Moscow-traded shares of Russia's two biggest lenders, Sberbank of Russia and VTB Bank PJSC, closed the day down 45.9% and 40.5%, respectively. Sberbank, whose London Stock Exchange-traded securities closed down 72.3%, said in a statement that it was prepared for any developments and that its systems were working normally.
U.K. Prime Minister Boris Johnson subsequently said Feb. 24 that all major Russian banks will face a full freeze on assets, after Sberbank and VTB escaped the first round of Western sanctions. The U.S. has signaled that they would be targeted in the event of an invasion of Ukraine.
Russia's latest moves prompted Ukrainian President Volodymyr Zelenskyy to declare martial law across the country. Ukraine's central bank passed a resolution instructing banks operating in the country to ensure uninterrupted operations and access to cash without restrictions, as well as suspending the operation of its foreign exchange market and banning forex withdrawals, among other measures.
Polish bank PKO Bank Polski SA said Feb. 24 that it will most likely face additional credit write-offs in its Ukrainian operations due to the conflict.