Italy’s Intesa puts $6.3 bln of Russia, Ukraine loans under microscope

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

MILAN, March 16 (Reuters) – Intesa Sanpaolo said on Wednesday that its loans to Russian and Ukrainian clients amounted to 5.1 billion euros net of guarantees from credit export agencies, which is around 1% of the total for Italy’s biggest bank.

Intesa (ISP.MI) added in a statement it was analysing its exposure to Russia and Ukraine to understand how to better handle risks in light of the European Union’s decision to phase out Russian fossil fuels by 2027.

Of the overall loan figure, some 4 billion euros are cross-border, with oil and gas firms accounting for half of the total.

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

Almost all of the loans expire by 2027, Intesa said, giving it time to work out a solution before the EU-set deadline.

“Over two-thirds of loans to Russian customers refer to top-notch industrial groups,” it said, adding these had “long-established commercial relationships with customers that are part of major international value chains, with a significant portion of their proceeds coming from commodities.”

Intesa’s local subsidiaries in Russia and Ukraine account for just 1.1 billion euros in loans to customers and sums due from banks, it added.

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

Like other major international banks, including domestic rival UniCredit (CRDI.MI), Intesa has said it is reviewing its presence in Russia, where it serves corporate clients with a staff of around 980 people across 28 branches.

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

Analysts at broker Autonomous calculated a core capital hit of around 75 basis points, lower than its initial estimate of 90 basis points, assuming a 60% loss on cross border exposures.

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

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

Intesa has said it was continuing to provide essential banking services at Pravex branches whenever it was safe to do so, while helping to evacuate employees under threat.

The bank said its local subsidiaries’ off-balance sheet exposure amounted to 300 million euros.

For the rest of the group exposures deriving, for example, from untapped credit lines were 1.1 billion euros and covered by 800 million euros in guarantees.

($1 = 0.9093 euros)

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

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