News Column

RBS limits lending to Russia as EU sanctions take hold

August 2, 2014

By James Salmon, Daily Mail, London

Aug. 02--Royal Bank of Scotland has cut lending to Russian customers in response to the growing crisis in the Ukraine.

The European Union on Thursday imposed sanctions on five state-backed Russian banks, including the country's biggest lender Sberbank.

RBS (down 5.3p to 350p) said it had already reduced lending in the first half of the year by pounds sterling 100m to pounds sterling 1.8bn. This includes pounds sterling 631m to other banks and pounds sterling 942m to Russian companies.

RBS, led by chief executive Ross McEwan, pictured, said it has reviewed credit ratings, adjusted lending limits and placed additional restrictions on new business in Russia. It said most of its exposure to Russia is old loans made before it was bailed out in 2008 and began to shrink its international operations. In recent weeks UK lenders have been told by the Bank of England's stability watchdog the Prudential Regulation Authority to prepare for tougher EU sanctions against Russia.

They have been urged to trawl through any links with Russia companies, either directly or indirectly to ensure there is no danger of breaching sanctions or anti-money laundering rules. A series of banks including Standard Chartered (down 10p to 1222p), RBS and Barclays (down 1.45p to 224.25p) have all been hit by hefty fines for sanctions busting.

But regulators do not believe sanctions and the crisis in the Ukraine poses a significant direct threat to the financial safety of UK banks.

Latest figures published by the Bank of International Settlements shows UK banks have a pounds sterling 9.3bn exposure to Russia. RBS is thought to have the biggest exposure of pounds sterling 2.1bn. But it said this accounts for just 0.2pc of its balance sheet.

Yesterday both Lloyds (down 0.92p to 73.33p) and Barclays said they have no 'material' exposure to Russia, meaning they were not obliged to make any disclosures in their half year results. But it is thought that a $1.5bn (pounds sterling 891m) loan to Russia's second biggest bank VTB by a group of lenders including Barclays has been thwarted due to EU and US sanctions.

At its half year results on Wednesday Barclays' finance chief Tushar Morzaria said: 'All transactions we have principle risk against are a relatively modest exposure for us.'


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Source: Daily Mail (London, England)

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