Filenews 3 April 2022 - by TheanoThiopoulou
Several banking systems of the core of the Eurozone are "plugged in" with direct exposures to Russia, Belarus, Ukraine, but the important thing is that Cyprus is absent from the list published on Friday by the European Banking Authority (EBA).
Despite the fact that the Cypriot banking system has at times been linked to Russia, mainly due to the Russian deposits of the recent past, Cyprus is absent from the reports that see the light of publicity and concern mainly Russia, which shows that there are no serious Russian dependencies, unlike other European countries. This is the first time that the European Banking Authority has provided relevant analytical data, noting that the exposures in the three countries are limited but the spill-over effects may be more significant, from the point of view of financial stability.
As a general conclusion, EBA states that banks' direct asset exposures to Russia, Ukraine and Belarus are concentrated in a few countries. French, Italian and Austrian banks reported the highest volume of exposures to Russian bonds. The Austrian, French and Hungarian banks were the ones with the largest exposure in Ukraine.
The banks reported that the largest volume of loans and advances were given to Russia to companies engaged in manufacturing (€16 billion), wholesale and retail trade (€10 billion), mines and quarries (€9 billion). Another feature is that household deposits outweigh loans to households in the case of Russia and Ukraine. However, loans to Russian companies are significantly higher than deposits from Russian companies, while deposits and loans to Ukrainian businesses are rather balanced.
The report of the European Banking Authority states that sanctions and measures by Russia and Belarus affect banks and cause credit risks (e.g. customers who cannot service their loans due to payment or currency restrictions). Market risks are also caused, and liquidity risks exist, mainly due to the loss of revenue from customers of sanctioned banks.
The image of the systems
The banking systems of countries that have direct asset exposures in Russia are: France €24.23 billion, Italy €21.79 billion, Austria €16.23 billion, Germany €4.49 billion.
In Ukraine they have: France €3.28 billion, Hungary €2.43 billion, Austria €1.56 billion, Germany €779 million.
In Belarus they have: Germany €269.39 million, other countries €139.81 million, Italy €96.39 million.
The European Banking Authority in its analysis notes that 80% of the total exposures were loans and receivables, mainly to companies. More specifically, in Ukraine the loan exposures are: Austria €1.88 billion, France €1.64 billion, Hungary €752 million, Italy €253 million. In Russia, exposures with loans to companies are: Italy €15.56 billion, France €10bn, Austria €7.41 billion, Germany €2.79 billion.
Household exposures are: France €6.96 billion, Austria €4.29 billion, Italy €1.98 billion, Hungary €1.70 billion
According to ETA, deposits from Russian and Ukrainian counterparties amount to a total volume of approximately €82 billion. About 70% of the deposit comes from companies and households. More specifically, deposits of companies from Ukraine: France €2 billion, Austria €1.85 billion, Hungary €1.10 billion, Germany €224.12 million
From households: Austria €1.88 billion, France €1.64 billion, Hungary €752.55 million, Italy €253 million
Company deposits from Russia: France €8.20 billion, Italy €6.76 billion, Austria €6.08 billion, Germany €993 million, other countries €986 million. Household deposits from Russia: Austria €8.86 billion, France €4.54 billion, Italy €4.15 billion
In deposits of households from Belarus: Austria €61.54 million, Spain €61.54 million, Sweden €31.42 million.
The report published by the European Banking Authority states that banks in the fourth quarter of 2021 maintain strong levels of capital, asset quality in the euro area banking system improved with the average NPL ratio being 2% and banks continue to have ample liquidity.
