UBS has revealed it has $10mn of loans excellent to shoppers hit by western sanctions imposed in response to Russia’s invasion of Ukraine.
The Swiss lender additionally introduced in its annual report on Monday morning that it has round $200mn of publicity to Russian property used as collateral in Lombard lending, that are loans secured in opposition to a portfolio of liquid property like equities and bonds, and different secured financing.
The world’s largest wealth supervisor stated that its direct threat publicity to Russia was $634mn on the finish of 2021, out of its complete rising market publicity of $20.9bn.
By comparability, Austria’s Raiffeisen reported a direct publicity to Russia of €22.9bn ($24.9bn) whereas France’s Société Générale and Crédit Agricole reported €18.6bn and €4.9bn of publicity, respectively, and ING of the Netherlands reported €6.7bn.
European financial institution share costs tumbled on Monday morning as western allies thought of a ban on importing Russian oil.
The Stoxx Europe 600 Banks index fell 5 per cent, as Raiffeisen was down 9 per cent, whereas UBS, SocGen and ING all fell 8 per cent in early buying and selling.
Russian oligarchs have lengthy favoured Swiss wealth managers as a result of nation’s stability and secrecy legal guidelines. Russian wealth accounts for about 1 per cent of annual international direct funding into Switzerland.
However the Swiss authorities’s choice final month to break its custom of political neutrality and match EU sanctions has made the nation’s banks a lot much less engaging to oligarchs.
“We’re working to implement sanctions imposed by Switzerland, the US, the EU, the UK and others — all of which have introduced unprecedented ranges of sanctions in opposition to Russia and sure Russian entities and nationals,” UBS stated.
Western banks have steadily been lowering their enterprise in Russia over the previous eight years following the nation’s annexation of Crimea, however those who have maintained vital operations within the nation have been hit arduous in current weeks.
Western sanctions have choked Russia’s financial system, resulting in a plunge within the worth of the rouble and a jolt in rates of interest.
Asset freezes imposed by western allies on a number of Russian banks, with seven resulting from be minimize off from the Swift world funds messaging system this week, have additionally affected world banks that transact with them.
“UBS can be presently monitoring settlement threat on sure open transactions with Russian banks and non-bank counterparties or Russian underlyings, as market closures, the imposition of trade controls, sanctions or different measures might restrict our potential to settle present transactions or to grasp on collateral, which can lead to sudden will increase in exposures,” the financial institution stated.
UBS added it had $51mn of property in its Russian subsidiary.
Individually, the group revealed executives had suffered a 1 per cent fall in bonuses for the 12 months in reflection of the $861mn loss the financial institution made on the collapse of household workplace Archegos Capital, which was a primary broking consumer.
The general bonus pool grew 10 per cent following a stellar 12 months in funding banking and wealth administration, nevertheless it was additionally diminished due to the Archegos loss.
“Compensation was diminished by an quantity equal to over half of the post-tax loss,” the financial institution stated. “This discount had a direct impression on compensation for enterprise and management features, in addition to for the group govt board.”