With a gross exposure of around $1 billion, Goldman Sachs announces exit from Russia, says GlobalData

Following the news that Goldman Sachs has become the first large US global investment bank to announce its exit from Russia;

Parth Vala, Company Profiles Analyst at GlobalData, a leading data and analytics company, looks at Goldman Sachs and other banks that have reduced activity in the country:

Goldman Sachs

“Goldman Sachs has reported a total Russian exposure, which refers to financial exposure in terms of credit risk and market risk, of around $1 billion. Most of this is non-sovereign. Its credit exposure was $650 million, as of FY2021. Of this figure, secured receivables* accounted for 52.2%, followed by loans and related items (27.2%), and over-the-counter derivatives** (20.6%).

“Similarly, the bank’s exposure to the Russian local financial markets stood at $258 million, comprising $687 million in stocks, $258 million in debt, and ($531) million in credit derivatives.”

JPMorgan Chase

“JPMorgan Chase, the largest US bank by assets, has announced that it will wind down its business in Russia. The bank’s exposure to Russia is expected to not be as significant as Goldman Sachs.”

Citigroup

“Early last year, Citigroup announced that it would close its consumer banking business from several markets across Asia, Europe and the Middle East—including Russia. However, the plan to sell its Russian consumer banking subsidiary has taken a hit due to the Russia-Ukraine conflict. This could force the bank to wind down its consumer banking operations in the country.

“As of FY2021, Citigroup’s Russian exposure was around $10 billion, including $8.2 billion of consumer and corporate loans and related instruments, reverse repos***, debt securities with the local government, and cash on deposit held with the Russian Central Bank and other financial institutions. With $5.4 billion in credit exposure, Russia was ranked 21st in Citi’s ranking of top 25 exposures by country.

“According to Bank for International Settlements, the US banks’ exposure to Russia amounted to around $14.7 billion as of Q3 2021, which makes them less vulnerable than their French and Italian counterparts—with an exposure of around $25 billion each—and Austrian banks, with an exposure of around $17.5 billion.

* Legally enforceable claims for payment held by a business for goods supplied or services rendered for which customers have ordered but not paid. Secured debts are those for which the borrower puts up some asset as surety or collateral for the loan.

** A financial contract that does not trade on an asset exchange, and which can be tailored to each party's needs

*** A short-term agreement to purchase securities in order to sell them back at a slightly higher price