Goldman Sachs Group and JPMorgan Chase have become the first major American banks to confirm they are leaving Russia after Vladimir Putin’s invasion of Ukraine.
Experts say the move will take months if not a year, but banks are now finding it much more difficult to operate in Russia due to the financial sanctions the country has been hit by.
Their choices come after the imposition of extraordinary sanctions against Moscow in response to its armed assault on Ukraine’s neighbor.
While European banks are more exposed to Russia, US banks are also heavily exposed, with a total exposure of $14.7 billion.
Goldman Sachs stated that it is following all regulatory and licensing requirements and will wind down operations rather than closing its doors immediately.
The winding down process has already begun.
Goldman’s credit exposure to Russia amounts to $650 million.
Its shares fell 2.8 percent to $325.97 in midday trading on Wednesday, March 9.
JPMorgan said: “In compliance with directives by governments around the world, we have been actively unwinding Russian business and have not been pursuing any new business in Russia, the bank elaborated that its current activities are limited while it’s helping global clients close out pre-existing obligations, manage Russian-related risk, and act as a custodian to clients.
Citigroup has declared its consumer business operations in Russia are now partial and the bank is implementing a plan to divest the franchise.
Citigroup is the US bank with the most Russian exposure, with nearly $10 billion, and has already admitted through a financial executive that its losses could reach half of that total.
Russia has been targeted with growing sanctions over the war in Ukraine, limiting its access to the global financial system and crypto-assets.
Several Russian institutions have been dropped from the SWIFT interbank communications system. Western Union, Paypal, Remitly, and Revolut, among other payment and remittance companies, have halted operations in the country. Visa and Mastercard have likewise put a halt to their operations.