BNP Paribas will interrupt its services in Russia

It is not necessarily at the forefront of the Russian market. But the decision of BNP Paribas, the first bank in the euro zone, will strongly resonate. The French banking giant announced on Monday evening that its Russian subsidiary (BNP Paribas ZAO) “will no longer be able to process transactions [de ses clients] from the end of March.

The group, which explains “strictly respect all international sanctions” specified in “initially, decided to suspend any new financing and, secondly, decided to suspend any new project in Russia”, a-t- he stated in a brief statement.

This subsidiary is attached to the CIB activity of the group, its financing and investment bank (Corporate and institutional banking). The suspension also affects the two other BNP Paribas businesses present in Russia, namely car leasing (Arval) and insurance (Cardif).

Gradual reduction

The country nevertheless represents a fairly small share of the European bank. “Before the current crisis, BNP Paribas already had a limited presence after gradually reducing its presence in Russia over the past few years by ending its retail banking activities in 2012 and its consumer credit activities in 2020. BNP Paribas was already the least active of the foreign banks operating in the country,” the group adds.

The latter generated, all businesses combined, only 56 million euros in revenue in Russia in 2021, for a result of 28 million euros before taxes. The group also explained at the beginning of the month that it had very limited exposure to Ukraine and Russia. They represent respectively 0.09% of its total commitments (around €1.7 billion) for Ukraine and 0.07% (around €1.3 billion) for Russia at the end of 2021.

A stone in the garden

This announcement is a stone in the garden of Societe Generale, the other major French listed bank, whose exposure to Russia is far more impressive. The banking group has a major retail network there, Rosbank, which employs 12,000 people. At this stage, the Banque de la Défense has not yet decided to throw in the towel, explaining only that it is able to absorb the “extreme scenario” of a nationalization of its subsidiary.

Two other major eurozone banks, Unicredit and Raiffeisen, also have a strong presence in Russia. They have both explained in recent days to “consider” leaving the country, without necessarily specifying the terms. On Monday, Swedish bank SEB said that under current conditions, maintaining operations in Russia was not viable. “SEB has therefore started to reduce them,” a spokesperson told Bloomberg, for whom this withdrawal “will be done in a responsible and orderly manner and in accordance with regulatory and legal obligations”.

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