From contagion to sanctions, Europe’s banks brace for Russia fallout By Reuters

By Lawrence White and Alexandra Schwarz-Goerlich

LONDON/VIENNA (Reuters) -European banks on Tuesday have been bracing for fallout and recent sanctions after Russia ordered troops into breakaway areas of jap Ukraine, with HSBC warning of market contagion and Austria’s Raiffeisen Financial institution Worldwide readying “disaster plans”.

Europe’s banks – significantly these in Austria, Italy and France – are the world’s most uncovered to Russia, and for weeks they’ve been on excessive alert ought to governments impose new sanctions in opposition to the nation.

European Union ambassadors in Brussels have been set to debate a wider sanctions bundle after Russian President Vladimir Putin ordered troops into jap Ukraine, and EU overseas ministers might determine on sanctions after a gathering in Paris this afternoon.

The boss of HSBC, one among Europe’s largest banks, stated on Tuesday he was involved concerning the danger of “wider contagion” for world markets from the deepening disaster in Ukraine, although the financial institution’s direct publicity was restricted.

“It is clear that there’s a chance of contagion or some second-order impact, however it can depend upon the severity of the battle and the severity of the retaliation if there’s a battle,” Noel Quinn instructed Reuters in an interview.

RBI, which has huge operations in Russia and Ukraine, stated whereas enterprise was now regular, “within the occasion of an escalation, the disaster plans that the financial institution has been making ready over the previous few weeks will come into impact”.

Shares of the Austrian lender have been down 7% late Tuesday morning.

An index of European banking shares was down 1.2%, sharper than the 0.8% fall within the Euro Stoxx index.

ING of the Netherlands, which has a big presence in Russia, stated: “An additional escalating battle may have main damaging penalties.”

With policymakers scrambling to place collectively sanctions packages, Germany’s banks stated they need to be certain that sanctions have been “exact and unambiguous”, eradicating any room for interpretation that would make it onerous for monetary corporations to hold them out.

The small print are vital as a result of non-compliance would danger stiff penalties.

“For banks, it’s essential that sanctions are formulated in a sufficiently exact and unambiguous method, (and) don’t go away any questions open for interpretation,” the German banking affiliation stated in a press release.

For now, banks are in limbo till sanctions change into concrete. “We’re monitoring the state of affairs,” stated a spokesperson with the European Banking Federation in Brussels.