foreign banks

Italy’s Intesa puts $6.3-billion Russia, Ukraine loans under microscope

Italy’s Intesa puts $6.3-billion Russia, Ukraine loans under microscope

INTESA SANPAOLO. The Intesa Sanpaolo bank headquarters is seen in Turin, Italy, November 7, 2018.

Stefano Rellandini/Reuters

Like other major international banks, Italy's biggest bank Intesa Sanpaolo is reviewing its presence in Russia

MILAN, Italy – Intesa Sanpaolo said on Wednesday, March 16, that its loans to Russian and Ukrainian clients amounted to 5.1 billion euros net of guarantees from credit export agencies, which is around 1% of the total for Italy’s biggest bank.

Intesa added in a statement it was analyzing its exposure to Russia and Ukraine to understand how to better handle risks in light of the European Union’s decision to phase out Russian fossil fuels by 2027.

Of the overall loan figure, some 4 billion euros are cross-border, with oil and gas firms accounting for half of the total.

Taking into account off-balance sheet items, Intesa’s total net exposure to the two countries is 5.7 billion euros ($6.3 billion), Reuters calculations based on Intesa’s figures show.

Almost all of the loans expire by 2027, Intesa said, giving it time to work out a solution before the EU-set deadline.

“Over two-thirds of loans to Russian customers refer to top-notch industrial groups,” it said, adding these had “long-established commercial relationships with customers that are part of major international value chains, with a significant portion of their proceeds coming from commodities.”

Intesa’s local subsidiaries in Russia and Ukraine account for just 1.1 billion euros in loans to customers and sums due from banks, it added.

Some 200 million euros are loans to entities that have been hit by international sanctions against Russia since its invasion of Ukraine, it said.

Like other major international banks, including domestic rival UniCredit, Intesa has said it is reviewing its presence in Russia, where it serves corporate clients with a staff of around 980 people across 28 branches.

UniCredit on Tuesday, March 15, said it was considering pulling out of Russia.

Intesa, which used to handle more than half of commercial transactions between Italy and Russia, has financed major investment Russian projects, such as the Blue Stream gas pipeline and the sale of a stake in oil group Rosneft.

It also employs 780 staff in Ukraine, where its Pravex Bank unit has 45 branches.

Intesa has said it was continuing to provide essential banking services at Pravex branches whenever it was safe to do so, while helping to evacuate employees under threat.

The bank said its local subsidiary’s off-balance sheet exposure amounted to 300 million euros.

For the rest of the group exposures deriving, for example, from untapped credit lines were 1.1 billion euros and covered by 800 million euros in guarantees. –

$1 = 0.9093 euros

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