French financial services company Societe Generale announced that it could lose its business in Russia, due to the potential impact of the war in Ukraine.
The company said that it has €18.6bn exposure to Russia, which includes €15.4bn onshore exposures (within Russia) in SG Russia, and €3.2bn in offshore exposures (outside Russia).
Last year, its operations in the country generated 2.8% of the group’s net banking income and 2.7% of net earnings.
The group has minor exposure of less than €80m to Ukraine, primarily through its subsidiary ALD, whose operations are focused on global corporate clients.
With the invasion of Ukraine, the US, the UK and European countries imposed financial sanctions on Russia, to squeeze its economy.
Societe Generale said that it is highly selective about its business in Russia and is focused on reducing risks, preserving its liquidity, and maintaining deposit inflows.
The bank assured that it will abide by the legislation in force, and apply all the required measures to strictly implement international sanctions.
Societe Generale claimed that it has an adequate buffer to mitigate the outcome of a potential extreme scenario, where it may be stripped of property rights to its assets in Russia.
The company, in its statement, said: “Offshore exposures to Russia, which mainly involve operations conducted by our financing activities in Global Banking and Investor Solutions, represent €3.2bn with top-tier counterparties in their sector of activity.
“They specifically concern the following sectors: €2.2bn for the metals and minerals sector, €0.7bn for the energy sector, €0.2bn for the transport and telecoms sector and €0.1bn for financial institutions.”
The announcement follows recent reports of Russia’s state-owned Sberbank exiting from European markets, due to large-scale cash outflows, and threats after sanctions.
The European Central Bank (ECB) has ordered to close the bank’s European business, after it has warned of a potential failure due to run on deposits, reported Reuters.
