Some western European banks have pulled out of Ukraine in recent years, but Russian players are among the most exposed to the country’s troubles.

With Crimea holding a referendum on secession from Ukraine and the International Monetary Fund preparing a rescue package, there is growing uncertainty around the country’s financial stability. The National Bank of Ukraine has restricted foreign currency withdrawals to avoid a run on the Ukrainian hryvnia.

Even before the current crisis, several western European banks active in Ukraine had been battered since the global recession in 2009 caused a surge in non-performing loans. For the three years from 2010 to 2012 inclusive, the top 20 foreign-owned banks in Ukraine lost an aggregate of more than $960m. Unsurprisingly, over 2012 and 2013, a series of western European banks including Sweden’s Swedbank, Italy’s Intesa, Austria’s Erste Bank, Germany’s Commerzbank and Greece’s Alpha Bank, all sold subsidiaries in Ukraine, and all to local buyers.

Of those remaining, the largest is Raiffeisen Aval, the subsidiary of the Austrian banking group that extends across central and eastern Europe (see chart 1). However, by far the largest country with assets in Ukraine is Russia, with four of the top 10 largest foreign-owned subsidiaries accounting for $15bn assets in total. Given the currently fraught state of relations between Ukraine and Russia, the position of these banks may remain unclear for some time, especially as three of them are the subsidiaries of Russian government-owned entities.

Of these, the largest is Prominvestbank, which is owned by Russian state development bank Vnesheconombank (VEB). VEB acquired Prominvestbank as a rescue deal when the Ukrainian lender faced nationalisation due to severe financial damage in 2008 and 2009. As a policy bank, VEB does not have regulated capital, for which reason we do not track its assets. VEB would presumably be financed as needed by the Russian government. By contrast, Alfa Bank is privately owned, and is the most exposed to Ukraine in terms of its Ukrainian assets as a proportion of total group assets (see chart 2). The other bank with significant exposure is Hungary’s OTP at just less than 6% of group assets.

Two of the Russian banks have already been losing money heavily in Ukraine since 2010. However, the most serious damage has been at Ukrsibbank, a subsidiary of France’s BNP Paribas, that lost more than $500m from 2010 to 2012. Total assets at Ukrsibbank have more than halved since 2007, although there has been no public indication as yet from BNP Paribas that it plans to sell.

Top Ukrainian banks

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