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RBS trims business ties with Russia over EU curb -- report
Royal Bank of Scotland Group Plc, Britain's largest state-owned lender, joined European banks, including Natixis SA in cutting lending to Russian companies amid fresh sanctions over Ukraine, Bloomberg reported on Friday.
Total exposure to Russian companies is 2.1 billion pounds ($3.5 billion) as "limits have been cut and credit restrictions introduced," RBS said in its earnings statement on its website. The bank's balance sheet exposure to euro-region periphery countries was reduced by 4% to 40.3 billion pounds in the first half of the year, it said.
The European Union this week stepped up economic pressure on Russia over its support for separatists in Ukraine and said it would prohibit Russian state-owned banks from selling shares or bonds in the world's main capital markets in an effort to force Moscow to end support for separatists in eastern Ukraine. The U.S. tightened sanctions earlier this month.
Russian companies have relied on funding from Europe and the U.S. and will need to find a replacement to support growth, said Vladimir Osakovsky, an economist at Bank of America Corp.
Western countries hardened their stance against Russia after a Malaysia Air jetliner crashed in a rebel-held area of eastern Ukraine killing all 298 people aboard. U.S. intelligence and military officials say it was the apparent target of a Russia-supplied missile. Rebels deny they were involved.
Natixis Chief Executive Officer Laurent Mignon said in an interview with Bloomberg Television today in Paris the French investment bank is cutting its business with Russian clients.
"We are looking carefully at the situation" on U.S. and EU sanctions against Russian entities, he said.
RBS also said it reviewed its lending in Ukraine.
"Following developments in Ukraine, ratings were reviewed, limits adjusted and additional credit restrictions placed on new business," RBS said. "Exposures are also reviewed against any international sanctions.
[Source: Itar Tass, Moscow, 01Aug14]
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