Foreign banks in Russia turn to rouble bonds
The two biggest foreign banks in Russia have been heavily tapping the rouble bond market to replace funding from their parent companies in Europe as they rush to reduce their exposure to the country.
Austria’s Raiffeisen Bank International and France’s Société Générale, which operate the two biggest foreign-owned bank branch networks in Russia, have both issued large amounts of rouble bonds for their Moscow-based operations in recent weeks.
The moves come amid growing official concern at the impact of the west’s sanctions against Russia after its annexation of part of Ukraine and the continued political stand-off between the former Soviet republic and Moscow.
They also illustrate how foreign banks with large operations in Russia are pushing their offshoots in the country to finance themselves on a standalone basis, rather than relying on credit lines from their western parents.
Frédéric Oudéa, SocGen’s chief executive, told a conference in London last week that the bank remained committed to Russia, adding: “Even if you have an extreme scenario in mind, a kind of expropriation . . . for us it will have a relatively limited impact in terms of capital, I think it is something we can easily manage.”
Raiffeisen has also been tapping the Russian bond market, most recently to raise Rbs10bn two weeks ago. The Austrian bank, which earns more profits from Russia than any other market, said it provided about €750m of financing to its offshoot in the country, where it had €10.3bn of loans at the end of June and €9.9bn of deposits.
This summer Raiffeisen said that the latest sanctions would have a “quite limited” impact on its business in the country, which has 195 branches, though it would be more cautious in writing new business there.
One benefit for the foreign-owned banks in Russia is that they have been attracting deposits from western companies since the country’s biggest banks, VTB and Sberbank, were hit by sanctions, according to two people familiar with the matter.
Source: FT- Foreign banks in Russia turn to rouble bonds
