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Sanctions on Russia Boomerang against European Banks

May 8, 2022 (EIRNS)—Today, RT reported that several large financial institutions have taken a major financial hit, which has already resulted in billions of euros in losses for European banks, due to the need to write down assets as well as setting aside cash to shield against the expected economic ramifications of anti-Russia sanctions.

The lenders have so far have experienced losses of about $9.6 billion, led by Société Générale and UniCredit; Société Générale is expected to take a €3 billion loss from the sale of its stake in Russia’s Rosbank, and UniCredit reportedly took a $2 billion hit. ING and Intesa Sanpaolo reported that Russian exposure had slashed their combined first-quarter net income by nearly $2 billion.

Several lenders have said their outlooks for the year would be scrapped if the drag of the Russia-Ukraine conflict on the global economy worsens. Intesa Sanpaolo has reportedly cut its 2022 profit target, warning that a “very conservative” scenario envisions an even harder blow.

Bloomberg reported that the chief risk officers of the major lenders are holding meetings among themselves and with regulators, scrambling to review the reliability of their computer models, and to make contingency plans.

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