Most of Wall Street has taken a hands-off approach to Russia. Now that the country, ruled by President Vladimir Putin, seems headed for default, that attitude appears to be the correct one.
Analysts have warned that it’s still too early to get a complete picture of the financial damage that would ripple from a Russian default, but it appears, at least for now, that the biggest U.S. banks have averted the worst of it. The biggest loser seems to be Citigroup, which said its exposure to Russian sovereign and corporate debt could result in losses in the range of $5.5 billion to $9.8 billion. The banks disclose their top 20 exposures to non-U.S. countries and Russia is not in that group for Bank of America, Wells Fargo or JPMorgan Chase and not in the top 10 for Morgan Stanley. Goldman Sachs has reported credit exposure of $650 million – a sliver of its $2.8 trillion credit book.
“This is obviously a very complicated situation because banks have all types of different exposures to both the Russian government itself but also to Russian corporates,” said Richard Ramsden, a managing director of the global investment research division at Goldman Sachs. “There are obviously going to be losses associated with that but it’s still early in terms of figuring out how this is going to end up because people are still digesting the impact of the sanctions. The loss ranges are very wide.”
Wall Street, burned by the Russia credit scandal of the late 1990s and pinched by sanctions that followed Putin’s 2014 takeover of Ukraine’s Crimea peninsula, has largely learned its lesson when it comes to entangling itself financially with the country, which faces global economic isolation after the Feb. 24 invasion of Ukraine.