* Ukraine's central bank limits deposits to $1,500 a day
* VTB, Sberbank shares slump
* Bankers calm clients, assess risk to deals
By Megan Davies
MOSCOW, March 3 Bankers scrambled to assess
possible damage to corporate deals and tried to calm customers
on Monday after Russia's military intervention in Ukraine
unnerved financial markets and hit bank shares in Russia and
Both local and foreign banks are likely to be affected if
Ukraine's currency the hryvnia continues to fall, loans are not
repaid or the country defaults on its sovereign debt even though
Ukraine's central bank has imposed limits on the amount
depositors can withdraw and is ready to provide liquidity.
"Every banker in Ukraine is trying to calm their clients and
to feel safe, that's their job," Mykola Chumak, chief executive
of Kiev-based private banking advisory firm IDNT, said.
"All the clients have got questions about currency rates and
portfolios and they all want to look into the eyes of their
banker and ask the questions directly."
Russian's Sberbank, which had temporarily
suspended lending in Ukraine, said it would start lending again
when the financial situation there improved.
The bank said it had a strong level of liquidity in Ukraine
with 1.7 billion hryvnia available and an unused line of support
from its main bank of $750 million.
Shares in Sberbank and VTB, which both have assets
in the country, fell 17 percent and 15 percent respectively, a
heavier fall than the wider Russian stock indexes
"Banks tend to reflect investor sentiment to Russia more
than any other stock so they are being used as a proxy," Chris
Weafer, partner at advisory Macro Advisory, said of the falls in
VTB and Sberbank's shares.
Weafer said concern over the rouble weakness was due to the
risk it could encourage people to take money out of local
currency and shrink banks' deposit bases. A weaker rouble also
leads to an erosion of consumer confidence which can lead to
higher defaults among businesses, Weafer said.
Ukraine's hryvnia has fallen to a record low while the
rouble has dropped 2 percent, although cushioned by central bank
"The (Russian banks) cannot pull out (of Ukraine),"
Alexander Danilov, analyst at Fitch, said. "The only thing which
they can do - which they've already done - is stop issuing new
loans there," he said. "And now they can only sit and wait and
try and recover what they have and hope the situation gets back
The crisis could have an impact for investment banks too as
they might have to consider pulling upcoming stock market
listings due to market turbulence. German retailer Metro's
plan to list a stake in its Russian wholesale business
is under threat, sources said.
Bankers are also trying to assess the impact of the crisis
on billions of dollars of Russian loans in the pipeline and
whether there will be contagion in the wider syndicated loan
For Ukraine's banks, the main risks are a sovereign default
or a prolonged slide in the hryvnia. That could hit their
capital levels, Elena Redko, analyst at Moody's told Reuters.
A big part of the banks' foreign exchange loans are to firms
with no with export revenues or foreign currency revenues,
making them susceptible to a fall in the hryvnia.
"So far, the National Bank of Ukraine has acted proactively
to monitor the banking system liquidity," Redko said.
The central bank has already acted to stem potential foreign
Local bank Privatbank and the Ukrainian arm of Italy's
biggest bank by assets, UniCredit, also have limits on
The largest banks with Ukrainian government debt exposure
are state banks Savings Bank of Ukraine, Ukreximbank and
Ukrgazbank plus privately held Delta, according to Moody's.
Savings Bank of Ukraine said its press service was not
accepting calls and did not respond to email. Ukreximbank,
Ukrgazbank and Delta Bank did not have working press office
numbers and did not respond to requests for comment.
Ukraine's new central bank head Stepan Kubiv said last week
that the bank was ready to provide liquidity, including cash to
banks, according to a statement on the bank's website. "We are
in control of the situation in the banking sector," Kubiv said.
Russian banks, with an estimated $28 billion of assets in
Ukraine spread between Sberbank, VTB, Gazprombank
and Vnesheconombank (VEB), have a lot at stake.
Sberbank and VTB have pledged long-term commitment although
they are halting lending. VTB has said it has exposure to
Ukraine of 20 billion roubles ($560 million), largely through
private companies, and that its business there amounts to about
2-3 percent of total operations. VTB's CEO Andrei Kostin said on
Wednesday the bank aimed to stay in Ukraine for the long term.
On Monday it said it had no further comment on Ukraine.
Sberbank's CEO German Gref said two weeks ago that the bank
had no intention of leaving the market. Sberbank had exposure of
130 billion roubles ($4 billion) to Ukraine - or less than 1
percent of its balance sheet.
State development bank VEB said in December its loan
exposure in Ukraine was nearly $4 billion, mostly through unit
Prominvestbank. It said last week it had no plans to exit and
declined further comment on Monday.
Ekaterina Trofimova, a Gazprombank board member, said on
Monday the bank was taking all necessary steps in Ukraine to
minimise its risks.
Other foreign banks in Ukraine have to decide whether to cut
losses and go or stay put to grab market share.
Raiffeisen Bank International said on Monday it
has frozen the sale of its Ukrainian arm due to the uncertain
situation in the country.