Goldman Sachs becomes the first bank from Wall Street to close its operations and exit Russia. The move to leave is in response to the country’s invasion of Ukraine. In an emailed statement, the company said that they were winding down its business operations in compliance with the licensing and regulatory requirements.
The powerhouse from Wall Street has been maintaining its presence in Russia in recent years though the country does not make a meaningful contribution to its global banking business.
The total credit exposure of Goldman Sachs to Russia by the end of 2021 was $650 million, and most of them were tied to non-sovereign borrowers or counterparts. The bank will continue to trade in corporate debt tied to Russia even after exiting. They will play the role of market maker between the buyers and sellers and help their clients reduce the risk in Russian securities that trade in the secondary market.
Relocation of the staffs
Goldman Sachs has relocated some of its staff based out of Moscow to Dubai after responding to requests from some of its Russian staff to work from a different location.
While Goldman Sachs is the first one from Wall Street to announce its departure from Russia, Citigroup Inc. said that it was assessing its operations in the country. As per Executive Vice president of Global Public Affairs, Edward Skyler, Citi had previously made efforts to exit its retail consumer business there and was operating on a limited basis given its obligation and circumstances.
Potential buyers for Citi retail business in Russia face possible sanctions imposed by the U.S. government, creating obstacles for the planned sale. Citigroup has approximately 3000 employees in Russia, giving it the largest presence of any major U.S. bank.
Last month, Citi had $9.8 billion of assets, loans, and other exposures in Russia’s local companies, counterparts, and Bank of Russia. The biggest U.S. bank by assets, JPMorgan Chase & Co., has not yet commented regarding its operation plan in Russia.
European banks started reviewing exposures
The turmoil of the war led European banks to examine their exposure to the region after investors sent the banking stocks tanking after the start of the conflict.
The Deutsche Bank AG said that it was considering the potential closure of its IT hub in Russia as a risk. The bank has more than 1300 IT employees in St. Petersburg and Moscow, and the invasion has forced it to consider options for the business and employees.
BNP Paribas said that it was suspending its new project financing in Russia after scaling down operations. Société Générale and Credit Agricole SA have also put on hold new financing in Russia. Raiffeisen Bank International, the European Bank which has the most lending exposure in Russia and Ukraine, has held its dividend payment to assess the impact of economic sanctions.
