BIS figures show banks cutting Russia exposures

Banks have been cutting their exposures to Russia since around the time the country annexed Crimea, in March 2014, Bank for International Settlements statistics show.

The latest international banking statistics, published on April 28, show global bank exposures at the end of 2021, before the full-scale invasion of Ukraine in February. Banks outside Russia continued to cut their exposures to the country in the fourth quarter of 2021, bringing them to $88 billion, down from $171 billion in Q1 2014.

Banks in France and the US cut their exposures the most, each by about half, accounting for the bulk of the overall decline since 2014. Europe has the largest exposures to Russia, and, despite cutting lending to Russia, French banks remain some of the most exposed, alongside Italian banks.

As claims fell, global banks became net borrowers from Russia. Net liabilities were $23 billion at the end of 2021. The BIS notes that a major factor in this was an increase by the Bank of Russia in holdings of foreign exchange reserves outside the country. Most of these overseas holdings, worth around $300 billion, were frozen as part of sanctions imposed after the February invasion.

Globally, the BIS statistics show relatively slow annual growth in banks’ cross-border claims, at 1.6% in Q4 2021. This is down from growth rates of more than 5% before the pandemic.