Despite the war in Ukraine, the major British bank is currently continuing to do business with Russia.
(Photo: AFP)
Frankfurt HSBC apparently wants to avoid trouble with Moscow: the major British bank is said to have changed several publications to weaken wording on the Ukraine war. This is reported by the Financial Times (FT), citing two people familiar with the matter.
Accordingly, an HSBC committee, which releases all analyzes and customer communications from the bank, is said to have replaced the word “war” with “conflict” in reports.
Since the beginning of March, media in Russia have been banned from using terms such as “attack”, “invasion” and “declaration of war” in reporting on the war. Otherwise there is a risk of high fines and up to 15 years in prison. Russia wants to prevent the spread of alleged misinformation about the Russian armed forces. Moscow describes the war as a “special military operation”.
At the request of the Handelsblatt, an HSBC spokeswoman declined to comment on the report – and referred to an earlier statement by the bank. It says: “Our thoughts are with everyone who is affected by the ongoing conflict in Ukraine.” The focus of everyone involved continues to be on supporting humanitarian aid. According to the media report, the language changes have triggered internal debates and fierce complaints from some employees.
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According to its own statements, HSBC has no branch and no private customer business in Russia. In addition, the bank no longer accepts new customers. Rather, HSBC focuses on services for multinational companies. “We are tasked with supporting our international clients in their decisions about doing business in Russia over the coming weeks,” the bank said in a statement.
However, the Russian subsidiary accounts for only a very small proportion of the group’s overall results and managed assets equivalent to around USD 900 million as of June last year. In total, according to FT, the bank employs around 200 people in Russia.
RBI and Unicredit consider withdrawal
The strategy of the major British bank is quite surprising: numerous western banks have already decided to withdraw from Russia or are considering such a move because of the war in Ukraine.
The head of Raiffeisenbank International (RBI), Johann Strobl, announced about two weeks ago that he was examining all strategic options for the future of Raiffeisenbank in Russia, including a “carefully managed exit” from Raiffeisenbank in Russia.
RBI’s dependency on business in Russia is significantly greater than that of HSBC: According to calculations by the rating agency Moody’s, RBI generates around 40 percent of its profits in Russia and Ukraine. According to the analysts at DZ Bank, this dependency makes the institute the western bank with the greatest risk of Russia.
Italy’s second largest bank, Unicredit, is also reviewing its business in Russia, bank boss Andrea Orcel announced in mid-March. At the major Italian bank, its Russian branch contributed around 180 million euros to the group’s profit in 2021. That corresponded to around eleven percent of the total result.
American banks have also responded to the ongoing war. The major US bank Citigroup announced that it would be withdrawing from Russia even more than previously planned.
The money house had already announced in April last year that it wanted to exit the consumer business there. “We have now decided to scale up the scale of this exit process and add more lines of business,” the bank said. The remaining business operations in Russia and exposure to the country would be further reduced.
Citigroup’s total exposure to Russia at the end of 2021 was nearly $10 billion. This makes the money house the most heavily involved bank in Russia of all US banks. The bank had already warned it could lose nearly half of that in the worst-case scenario. The major US banks JP Morgan and Goldman Sachs had previously announced that they were withdrawing from Russia.
It remains unclear why HSBC is sticking to its Russian business despite the war. Members of the British Parliament had already increased the pressure on the bank and demanded that HSBC should follow the example of the other banks. Without success. The major British bank affirms that it will comply with all applicable sanctions.
More on the subject: European banks consider withdrawing from Russia