Italy’s Intesa puts $6.3 billion in loans to Russia and Ukraine under the microscope

The Intesa Sanpaolo skyscraper, designed by Italian architect Renzo Piano, is seen in Turin April 10, 2015. REUTERS/Giorgio Perrottino/File Photo

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  • A 1.9 billion euros in loans to Russian oil and gas companies
  • Working to reduce risk in light of the new EU energy plan
  • Total loans 5.1 billion euros, off-balance sheet 0.6 billion
  • Only 200 million euros in loans to sanctioned entities

MILAN, March 16 (Reuters) – Intesa Sanpaolo said on Wednesday its loans to Russian and Ukrainian customers amounted to 5.1 billion euros net of guarantees from export credit agencies, around 1% of the total the largest Italian bank.

Intesa (ISP.MI) added in a statement that it is analyzing its exposure to Russia and Ukraine to understand how to better manage risks in light of the European Union’s decision to phase out fossil fuels. Russians by 2027.

Of the total amount of loans, some €4 billion is cross-border, with oil and gas companies accounting for half of the total.

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Taking into account off-balance sheet items, Intesa’s total net exposure to the two countries is 5.7 billion euros ($6.3 billion), according to Reuters calculations based on Intesa figures.

Almost all loans expire by 2027, Intesa said, giving it time to find a solution before the EU deadline.

“More than two-thirds of loans to Russian customers are with leading industrial groups,” he said, adding that these had “long-established business relationships with customers in major value chains. international markets, a significant part of their income coming from raw materials.”

Intesa’s local subsidiaries in Russia and Ukraine account for just 1.1 billion euros in customer loans and amounts owed by banks, he added.

Some 200 million euros are loans to entities that have been hit by international sanctions against Russia since its invasion of Ukraine, he said.

Like other major international banks, including domestic competitor UniCredit , Intesa said it was reviewing its presence in Russia, where it serves corporate clients with a staff of around 980 across 28 branches.

UniCredit said on Tuesday it was considering pulling out of Russia. Read more

Analysts at brokerage Autonomous calculated an impact on base capital of around 75 basis points, lower than its original estimate of 90 basis points, assuming a 60% loss on cross-border exposures.

Intesa, which handled more than half of trade transactions between Italy and Russia, has financed major Russian investment projects, such as the Blue Stream gas pipeline and the sale of a stake in oil group Rosneft (ROSN.MM ).

It also employs 780 people in Ukraine, where its Pravex Bank unit has 45 branches.

Intesa said it was continuing to provide essential banking services at Pravex branches whenever safe, while helping to evacuate employees at risk.

The bank indicated that the off-balance sheet exposure of its local subsidiaries amounted to 300 million euros.

For the rest of the group, exposures arising, for example, from unused credit lines amount to €1.1 billion and are covered by €800 million of guarantees.

($1 = 0.9093 euros)

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Reporting by Valentina Za; Editing by Keith Weir and Alexander Smith

Our standards: The Thomson Reuters Trust Principles.

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