UBS and Credit Suisse are drawing down their offices in Moscow, albeit in small steps.
Since Russia's invasion of Ukraine, UBS and Credit Suisse continued to operate their respective branches in Moscow. While rival Goldman Sachs flew its staff to the Middle East and Société Générale, with a heavy presence in Russia, pulled the plug, the lights continued to burn in the offices of the Swiss banks.
Credit Suisse and UBS employed about 120 and 50 people in Moscow. Now, both banks are winding down their operations, with Credit Suisse CEO Thomas Gottstein telling reporters Wednesday it was putting local staff on paid leave.
In addition to the staff move, Credit Suisse is generally scaling back its positions in Russia and Russian clients, with the bank indicating in its first-quarter report the value of its Russia-related business is 200 million Swiss francs ($207 million), contracting by 16 million francs since the end of last year.
Staff Cuts
This week UBS said its direct exposure to Russia stood at $400 million, down from $600 million at year-end. Separately, people familiar with the matter said that the bank had begun reducing staff in the country.
The bank's quarterly report showed that 0.7 percent of total assets under management are attributable to «Russian individuals not resident in the European Economic Area or Switzerland». In terms of assets under management in the core business, this equated to about $22 billion.
The withdrawal does not come without losses, saying that loans to Russian clients had impacted its accounts by $100 million by the end of March. Credit Suisse by comparison suffered losses of 206 million francs in connection with the war and sanctions against Russia.
High Outflows at Credit Suisse
Credit Suisse seems to have been hit even harder by the consequences of the Ukraine war. In its quarterly report, it disclosed that its combined asset management business, which includes wealth management, the Swiss bank and asset management, suffered outflows of 10.4 billion francs related to the Russian sanctions.
Although net credit exposure to Russia was reduced by more than half, it still stood at 373 million francs at the end of the quarter, with gross exposure of 1 billion. Of this, 177 million francs were to financial institutions, 82 million to corporates, 79 million to individuals, and 35 million to sovereigns.
The bank said it continues to reduce its exposure to financial institutions, and that exposure to corporates and individuals is highly collateralized with assets outside Russia. Still, it's hard to decipher at this point why it hasn't been able to reduce exposure more quickly and why sanctions-related outflows have been so high.
Would the last one out, please turn off the lights.
With reporting by Samuel Gerber and Andrew Isbester.
