Over the last several weeks, global financial firms have scrambled to navigate how to address Russia’s invasion of Ukraine.
Companies and governments all over the world are cutting ties with the country in objections to Russia’s actions. Financial firms have been no different.
But the process to leave the country isn’t so simple. For example, a Russian client that is facing sanctions may also have a subsidiary in Mexico, which is not imposing sanctions. Exiting has been complex to say the least.
Citigroup recently announced that it would be dialing back much of its business in Russia, while Goldman Sachs, JPMorgan Chase, and Deutsche Bank are looking to exit.
“For me, personally, it is very difficult because I feel I was complicit. I’m Russian and it is black and white: if you stand for strong corporate governance there is nothing left but just to condemn the war against Ukraine and the Putin regime,” said Georgy Egorov, a former Goldman Sachs banker.
The pressure to keep up with government sanctions has grown, and those with Russian shares are now at a standstill.
This means billions of dollars are at stake. Around a dozen lenders have about $100 billion of exposure to Russia according to data from Bloomberg.
For instance, one manager of a group of Moscow-based traders, said that his firm’s activity levels have tumbled by three-quarters after brokers cut their ties.
However, many firms have suggested that they can withstand any financial hit to their Russian assets.
“Banks should cut business with Russia because it is the right thing to do commercially, but yes, it is a moral point, too,” said Natalie Jaresko, Ukraine’s finance minister during the annexation of Crimea in 2014.