* Russian banks Ukraine exposure around $28bln -Putin
* Risks mainly due to loans to local companies - Fitch
* Exposure may impact solvency, may need support - Fitch
By Megan Davies
MOSCOW, Feb 25 Russian banks which made loans to
Ukrainian companies or businessmen who bought assets there are
at risk if the country's economy falls into recession or the
currency devalues, Fitch credit rating agency said on Tuesday.
Ukraine this week appealed for $35 billion over two years to
hold up its economy following the ouster of President Viktor
Yanukovich. Its economy flatlined in 2013 and the hryvnia
currency has fallen 8 percent in three months.
Russian banks have around $28 billion of exposure in total
to Ukraine, President Vladimir Putin said in November, naming
Gazprombank, Vnesheconombank (VEB), Sberbank
and Bank VTB as creditors.
Banks' exposure may "materially impact the solvency of some
institutions" if borrowers suffer as a result of economic
stress, Fitch said.
"By solvency we mean that in the worst case scenario some of
these banks may (require) support," Alexander Danilov, senior
director of financial institutions at Fitch in Moscow told
If the borrowers face problems, the subsidiary banks may
need to be supported by the parents, which in turn may need
support from the Russian government, he said.
Danilov said that he expected the government would help in
such a case, partly due to government ownership levels in
Russian banks and their systemic importance.
Fitch said the risks Russian banks face relate primarily to
loans to local companies - which account for more than half of
the total exposure - and to Russian and Ukrainian businessmen
who borrowed funds to buy Ukrainian assets.
"The sectors (in which the risks are present) would reflect
the Ukrainian economy," Danilov said, adding this has a large
share of metals and mining companies, as well as machinery and
State development bank Vnesheconombank's (VEB) Ukrainian
subsidiary has assets of around $5 billion, Fitch said, or 29
percent of its parent's equity.
Gazprombank has the second largest exposure relative to its
capital, Fitch said, including a loan to Ukrainian oil and gas
company Naftogaz which is secured on payments from Russian gas
VTB's risks are mainly from its local subsidiary, Fitch
said, while for Sberbank the problem is manageable because its
local subsidiary is relatively small.
Rival credit rating agency Moody's on Monday said that
Russian banks could easily absorb any credit losses stemming
from Ukraine's crisis from their earnings this year.
German Gref, chief executive of Sberbank, said in December
the bank would be able to absorb losses in Ukraine thanks to its
strong capital base.
Sberbank had exposure of 130 billion roubles ($4 billion) to
Ukraine - or less than 1 percent of its balance sheet of $460
billion - at the end of the third quarter.
Gref said on Friday the bank had temporarily suspended some
lending in Ukraine, but did not intend to exit the market.
VTB said in December it had made adequate provisions against
its risks in Ukraine. Its exposure consisted of a bilateral loan
and purchases of market instruments, it said, and it was cited
by Gazprombank analysts as saying its sovereign debt exposure
was limited to 20 billion roubles ($562 million). On Monday it
said its bank in Ukraine was operating normally.
Russia's state development bank, VEB, said in December its
own loan exposure in Ukraine was nearly $4 billion, mostly
through subsidiary Prominvestbank. It said on Monday it had no
plans to exit Prominvestbank and was providing the bank with
necessary liquidity support.
Gazprombank did not respond to a request for comment on
(Reporting by Megan Davies. Editing by Jane Merriman)