World-famous banks made the decision to leave Russia. However, they face a risk-ridden retreat, juggling obligations to clients and employees while complying with sanctions that have changed the rules of doing business in the country.
Besides, there is a growing realization that sanctions imposed on Russia are likely to remain long-term. So, it is important to keep various factors in mind to minimize risk factors.
However, the sweeping scope of these sanctions means banks will need more than less manpower in order to comply with sanctions.
Citi, JPMorgan, and Goldman closed their doors to new business in Russia. Interestingly, all of them declined to comment on whether they might surrender their potentially lucrative Russian banking licenses in the longer term.
More than half of Goldman’s employees in Moscow moved or are relocating to Dubai according to several sources. JPMorgan used to employ around 160 people in Moscow. A large percentage of Russian citizens will remain in Russia according to the sources familiar with the topic.
Before the war in Ukraine Citi made an important decision. It had put its consumer business in the country up for sale. Moreover, Citi is mothballing its institutional and wealth management businesses.
Banks are working hard to adjust to the new reality. More importantly, JPMorgan and Citi face some of the biggest headaches as they act as custodians for many Western firms trading assets in Russia.
As a reminder, this role involves particular legal obligations the duration of which can vary from hours to years.
Asset management firms such as PIMCO and Black Rock will be relying on Citi and other banks to help mitigate losses of tens of billions of dollars of Russian holdings when trading on the Moscow stock exchange resumes.
But this assumes banks are able to obtain the necessary permits and find others willing to buy. The war in Ukraine created numerous challenges for banks, countries, and the world as a whole.
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