After being hit with new sanctions, Russia’s oligarchs are scrambling to avoid the hefty penalties by finding places of business outside the country. Who will be next and how far can they go?
JP Morgan and Goldman Sachs have loosened up on Russian businesses. JP Morgan has removed the “red flag” from its relationship with Russia, while Goldman Sachs is considering a new strategy for the country. Read more in detail here: jp morgan bank.
Following Russia’s invasion of Ukraine, JPMorgan Chase & Co (JPM.N) and Goldman Sachs Group Inc (GS.N) on March 10 announced that they were suspending their Russian businesses, becoming the first major U.S. banks to exit and putting pressure on rivals to follow.
Western financial organizations have found it more difficult to operate in Russia as a result of international sanctions.
According to statistics from the Bank of International Settlements (BIS), European banks seem to be the most strongly exposed to Russia, with a total exposure of $14.7 billion.
The bank said in an emailed statement:
“In accordance with regulatory and licensing requirements, Goldman Sachs is winding down its operations in Russia.”
JP Morgan, for one, stated:
“We have been aggressively unwinding Russian business and have not pursued any new business in Russia in accordance with directions from governments throughout the globe.”
The bank’s current operations are restricted, and it is aiding its international customers in managing Russian-related risk, addressing and closing out pre-existing liabilities, acting as a custodian for clients, and looking after personnel.
Rather than shutting down operations immediately, Goldman will wind them down, according to a person familiar with the matter who spoke on the condition of anonymity. Any losses will be “immaterial.”
According to three people familiar with the situation, almost half of Goldman Sachs workers in Moscow have relocated or are relocating to Dubai as a result of Russia’s invasion of Ukraine last month. The bank employed roughly 80 people in Moscow.
According to the sources, some of the transferred employees will be part in the winding down, collaborating with colleagues who remain in Moscow.
According to one source, Goldman’s Russia chief is expected to stay in Moscow. In its annual report, the bank disclosed a $650 million credit exposure to Russia.
Goldman Sachs’ stock fell 2.8 percent to $325.97 in noon trade on Friday. Up to the closing of business on Wednesday, Goldman Sachs had lost 12.8 percent this year.
Citigroup Inc (C.N), the largest exposed U.S. bank, is scaling down its Russian consumer business while continuing to its prior ambitions to sell the franchise. Citigroup’s overall Russian exposure is roughly $10 billion, and its chief financial officer cautioned that under a “severe stress scenario,” the company’s loss might be half that.
Citigroup may stretch the impact of potential Russian losses over many quarters by recording expenditures to increase buffers on certain assets before the losses are official, according to Viola Risk Advisors analyst David Hendler.
Handler said, “
“It might put downward pressure on profitability in the coming quarters.”
Other American banks operating in Russia include JPMorgan (JPM.N), which declined to comment on its intentions.
In general, Goldman Sachs ranked seventh in terms of investment banking income in Russia in 2021, with Citigroup in fifth place with $22.8 million, Morgan Stanley in fourth place with $27.3 million, JPMorgan in second place with $32.8 million, and Russia’s VTB Capital in first place with $32.8 million. According to Refinitiv statistics, Goldman Sachs made $19.5 million last year.
Previously, two persons familiar with the situation informed Reuters that Raiffeisen Bank International (RBI) of Austria is contemplating exiting Russia.
Banks, according to experts, will have a difficult time separating themselves from the market, with the process lasting months or perhaps years.
Frequently Asked Questions
Is Goldman Sachs in Russia?
A: Goldman Sachs is not in Russia, its an American corporation.
Why is J.P. Morgan better than Goldman?
Is J.P. Morgan as good as Goldman Sachs?
A: Goldman Sachs is a major global investment bank. J.P Morgan Chase & Co., Inc., or simply JP Morgan, is the United States largest banking by assets and market capitalization among banks in North America
