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Goldman (GS), JPMorgan (JPM) to Fold Up Russia Operations
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Global banking titans Goldman Sachs Group (GS - Free Report) and JPMorgan (JPM - Free Report) have decided to wind up their businesses in Russia after a raft of sanctions was imposed on the country in response to the latter’s military assault on Ukraine.
Per a Reuters article, according to the Bank of International Settlements data, while European banks are highly exposed to Russia, the U.S. banks have no less exposure, aggregating a mammoth $14.7 billion. The moves by GS and JPM follow a growing list of global companies, including accounting firms, technology groups, food suppliers and energy producers that increasingly distanced themselves from the country in the wake of the ongoing conflict.
Per Goldman and JPMorgan, their exits comply with the government instructions. “Goldman Sachs is winding down its business in Russia in compliance with regulatory and licensing requirements. We are focused on supporting our clients across the globe in managing or closing out pre-existing obligations in the market and ensuring the wellbeing of our people,” the bank said in an emailed statement, per the article.
Since 1998, Goldman has had its presence in Russia. The country underpins a small fraction of GS’ assets and liabilities. The bank disclosed that its total credit exposure to Russia was $650 million, while the total market exposure aggregated $414 million as of Dec 31, 2021.
Goldman did not set a time frame for the completion of the wind-down. It employs nearly 80 people in Russia and is arranging for the departures of those who asked to leave, per Andrea Williams, a spokeswoman for the bank. Even with the shuttering of Russian operations, GS will continue to garner market-making services for buyers and sellers to aid trading of debt tied to the Russian firms.
Echoing similar sentiments, JPMorgan said in a statement, “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.”
JPM scaled down its existing activities in the country and is helping global clients manage their Russian-related risks plus address and close out the pre-existing obligations, besides acting as a custodian to clients and taking care of its employees, before folding up completely.
Our Take
The moves by GS and JPM are expected to put pressure on other Wall Street banks to follow suit in a bid to further financially alienate the country.
JPM and GS fear indirect impacts provided the Russia-Ukraine conflict lingers for long. Sanctions and export controls or any actions by Russia could materially hinder their business activities in and from Russia. Moreover, any further measures taken by the United States or its allies could adversely impact the regional and global financial markets and economic conditions. Hence, the exit moves from Russia, intended by both banking powerhouses, are likely to provide a cushion against any major blows to their financials.
Shares of JPM have declined 15.5%, wider than the GS’ fall of 5.4% in the past year.
Image Source: Zacks Investment Research
Currently, Goldman carries a Zacks Rank #3 (Hold), while JPMorgan carries a Zacks Rank #4 (Sell).
Though none of the Wall Street banks except GS and JPM announced closing down their Russian operations, Citigroup (C - Free Report) had previously announced plans to exit its consumer business in the country and is now operating it “on a more limited basis given current circumstances and obligations”.
Further, amid the ongoing war, C disclosed in its annual report a $9.8-billion exposure to Russia as of Dec 31, 2021.
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Goldman (GS), JPMorgan (JPM) to Fold Up Russia Operations
Global banking titans Goldman Sachs Group (GS - Free Report) and JPMorgan (JPM - Free Report) have decided to wind up their businesses in Russia after a raft of sanctions was imposed on the country in response to the latter’s military assault on Ukraine.
Per a Reuters article, according to the Bank of International Settlements data, while European banks are highly exposed to Russia, the U.S. banks have no less exposure, aggregating a mammoth $14.7 billion. The moves by GS and JPM follow a growing list of global companies, including accounting firms, technology groups, food suppliers and energy producers that increasingly distanced themselves from the country in the wake of the ongoing conflict.
Per Goldman and JPMorgan, their exits comply with the government instructions. “Goldman Sachs is winding down its business in Russia in compliance with regulatory and licensing requirements. We are focused on supporting our clients across the globe in managing or closing out pre-existing obligations in the market and ensuring the wellbeing of our people,” the bank said in an emailed statement, per the article.
Since 1998, Goldman has had its presence in Russia. The country underpins a small fraction of GS’ assets and liabilities. The bank disclosed that its total credit exposure to Russia was $650 million, while the total market exposure aggregated $414 million as of Dec 31, 2021.
Goldman did not set a time frame for the completion of the wind-down. It employs nearly 80 people in Russia and is arranging for the departures of those who asked to leave, per Andrea Williams, a spokeswoman for the bank. Even with the shuttering of Russian operations, GS will continue to garner market-making services for buyers and sellers to aid trading of debt tied to the Russian firms.
Echoing similar sentiments, JPMorgan said in a statement, “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.”
JPM scaled down its existing activities in the country and is helping global clients manage their Russian-related risks plus address and close out the pre-existing obligations, besides acting as a custodian to clients and taking care of its employees, before folding up completely.
Our Take
The moves by GS and JPM are expected to put pressure on other Wall Street banks to follow suit in a bid to further financially alienate the country.
JPM and GS fear indirect impacts provided the Russia-Ukraine conflict lingers for long. Sanctions and export controls or any actions by Russia could materially hinder their business activities in and from Russia. Moreover, any further measures taken by the United States or its allies could adversely impact the regional and global financial markets and economic conditions. Hence, the exit moves from Russia, intended by both banking powerhouses, are likely to provide a cushion against any major blows to their financials.
Shares of JPM have declined 15.5%, wider than the GS’ fall of 5.4% in the past year.
Image Source: Zacks Investment Research
Currently, Goldman carries a Zacks Rank #3 (Hold), while JPMorgan carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Though none of the Wall Street banks except GS and JPM announced closing down their Russian operations, Citigroup (C - Free Report) had previously announced plans to exit its consumer business in the country and is now operating it “on a more limited basis given current circumstances and obligations”.
Further, amid the ongoing war, C disclosed in its annual report a $9.8-billion exposure to Russia as of Dec 31, 2021.