ALL ARTICLES
/
Banking

Société Générale exposed to Russia

Martin Baelden
|
August 28, 2024

Société Générale is the most exposed in France to the Russian situation following the invasion of Ukraine and the European sanctions. The Rosbank subsidiary could be fully impaired, in which case the group would suffer a shock of 2.7 billion euros. The group is calm, Rosbank's business is mainly local, and is closely monitoring the situation.

The European Union and the United States are taking an unprecedentedly tough stance against the aggressor country and its financial sector. Russian Central Bank reserves in the EU, but also in the G7 countries, are frozen in order to prevent any transactions or repatriation of these funds to Russia. Prominent Russians such as Vladimir Putin, his head of diplomacy Sergei Lavrov, senior military officers and oligarchs have their financial assets held in the EU frozen. In addition, the European Union has decided to exclude several Russian banks from the Swift messaging and transaction system, a key cog in the wheel of global finance and trade.

The sanctions are heavy and penalize the banks, including in Europe, where the big banks are falling sharply. 20 % on February 28, for Société Générale.

Further sanctions will come and what happens next is uncertain. Banks are not the only economic activities impacted by the conflict. Active monitoring of the economic repercussions and measures taken will have to be put in place.