The European Central Bank (ECB) has stepped up its pressure on banks in the eurozone to reduce their exposure to Russia, ECB supervisory board president Andrea Enria said in an interview with the Financial Times, cited by Reuters and Agerpres. .

Many of the 45 Western banks with branches in Russia have tried to leave the country, but only a few have succeeded, often at great cost. The two banks with the greatest influence on Russia, which are controlled by the ECB, are the Austrian group Raiffeisen Bank International and the Italian UniCredit.

“Of course, we are putting pressure on banks to actively manage their risks due to their exposure to Russia. Any opportunity for banks to get out of this business would be attractive from a supervisory perspective,” Enría said.

Russia sets conditions for the withdrawal of “unfriendly” companies

Western banks planning a quick exit from Russia were dealt a blow last year when President Vladimir Putin announced that foreign owners from “unfriendly” countries would not be able to complete exit deals without the approval of Moscow’s Finance Ministry.

“The window for sales has closed a bit,” Enria admitted.

The French banking group Societe Generale is one of the few Western banks that managed to complete the sale of its Russian subsidiary. But the French group lost 3.1 billion euros when it agreed to sell its Russian operations to billionaire Vladimir Potanin, a Kremlin ally.

Another reason for the ECB’s concern is the economic crisis caused by the Russian invasion of Ukraine, which has led to higher prices for energy and other raw materials, as well as an unprecedented increase in the ECB’s base interest rate.

The ECB is concerned about the portfolios of European banks

Enria told reporters that while bank profits and capital levels have been boosted by higher interest rates, the ECB is concerned that signals of higher borrowing costs and slower economic growth could lead to a new build-up of non-performing loans.

“For certain portfolios and lines of business, the costs associated with the deterioration of asset quality may be greater than the income benefits as interest rates continue to rise,” Enria said, adding that there has been an increase in so-called “staging.” 2″ non-performing loans.

ECB officials are also concerned that some banks have not built up enough reserves to cover potential losses from current problem loans. Enria said it increased capital requirements for 24 such banks last year.

The ECB is responsible for the direct supervision of the most important banks within the framework of the Single Supervisory Mechanism (SSM).

Currently, 109 banks are under the direct supervision of the ECB. These banks are either the largest in their respective countries, have total assets of more than €30 billion, or have significant cross-border operations. They own almost 82% of the banking assets of the countries in question.

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