Strategic Management in Global Environments
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Citigroup-Russia.pdf
3/3/22, 4:39 PMCitigroup Has Nearly $10 Billion in Total Russian Exposure - WSJ
Page 1 of 4https://www.wsj.com/articles/citigroup-has-nearly-10-billion-in-total-russian-exposure-11646066390
Citigroup Has Nearly $10 Billion in Total Russian Exposure Sanctions complicate Citigroup’s attempt to sell its Russian consumer bank David Benoit Feb. 28, 2022 11:39 am ET
Customers at a Citibank bank branch in Moscow on Monday.
Photo: Andrey Rudakov/Bloomberg News
Citigroup Inc. C -3.26% disclosed Monday it had nearly $10 billion in total exposures to Russia at the end of 2021, some of which sit in a consumer bank it has been trying to sell and may now be stuck with.
The New York giant, which bills itself as the world’s truly global bank, is by far the most exposed of the big U.S. banks to Russia in the midst of a global
3/3/22, 4:39 PMCitigroup Has Nearly $10 Billion in Total Russian Exposure - WSJ
Page 2 of 4https://www.wsj.com/articles/citigroup-has-nearly-10-billion-in-total-russian-exposure-11646066390
sanctioning regime that is threatening Russia’s economy after its invasion of Ukraine last week. Russia is, nonetheless, a small part of Citigroup’s $2.29 trillion in assets.
Sanctions from the U.S., Europe and countries around the world have targeted Russia’s biggest banks, oligarchs and companies—all aimed at pressuring Russian President Vladimir Putin after he ordered the invasion.
Citigroup operates with an on-the-ground presence in both Russia and Ukraine, unique among U.S. banks, part of its far-reaching outposts that help global companies move money around the world.
Its exposures to Russia include $2.2 billion in corporate loans and $700 million in consumer loans, it said in a filing Monday. It also holds $1.5 billion in investment securities.
Outside of its Russian unit, Citigroup units around the globe also have $1.6 billion in exposures to Russian entities.
On top of those loans and investments, Citigroup added an additional disclosure Monday that it had $1 billion in cash at financial institutions including the Russian Central Bank and $1.8 billion in reverse repurchase agreements with other entities.
Citigroup had halved its Russian exposures following Russia’s 2014 annexation of Crimea, and it and other banks have refrained from making big bets on the country since then.
The bank didn’t disclose if any of its loans or assets were connected to any sanctioned entity and didn’t provide any updates on the assets since the war broke out.
Swift Sanctions: How Cutting Off Banks Pressures Russia
3/3/22, 4:39 PMCitigroup Has Nearly $10 Billion in Total Russian Exposure - WSJ
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Swift Sanctions: How Cutting Off Banks Pressures Russia
A powerful coalition of democracies announced it would cut off some Russian banks from the global payment
system Swift. Here’s how Swift works, and how the move could ramp up pressure on Russian President Putin.
Photo: Anton Vaganov/Reuters
Citigroup’s Russian consumer bank operates three branches in Moscow, two in St. Petersburg and a smattering around the country. The bank had announced it would sell the unit as it pares back its international consumer operations. The sale was already expected to be complicated, but the current sanctions make it harder. A foreign bank is unlikely to want more Russian exposure and the Russian banks are now under sanction, raising questions about who could buy it.
An official from Russian giant VTB said publicly last year his bank was interested in bidding for the asset, but VTB is now under sanctions.
Citigroup has already been forced to shut one foreign consumer bank, in South Korea after failing to sell it, a move that cost it more than $1 billion. The Russian bank is far smaller.
A bank spokeswoman declined to comment about the ongoing sale.
3/3/22, 4:39 PMCitigroup Has Nearly $10 Billion in Total Russian Exposure - WSJ
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On the other side of the conflict, Citigroup has been working to ensure the safety of some 200 employees in Ukraine. The bank evacuated foreigners working in Ukraine weeks ago as Russia mobilized, people familiar with the bank said. It worked to get dollars into employees’ hands and move them around the country if they wanted, the people said.
Over the weekend, Alexander McWhorter, the head of the bank’s operations in the country, posted on LinkedIn that he was safe and that the bank was still working to help where it could.
Write to David Benoit at [email protected]
