From Russia with debt – Novobanco loses €29M

Novobanco has suffered a devaluation of €29 million because of its exposure to Russian business debt following the Ukraine war.

According to the news outlet ECO, Novobanco had a €49 million exposure to Russia by the end of 2021, of which €43 million was down to Russian company securities (including State company Gazprom) and €5 million in loans to clients.
However, with the onset of the war in Ukraine, securities valued €14.1 million according to information from the bank’s financial report for the first half of the year.
ECO has discovered that the bank did not offload any Russian securities during this period and the devaluation from exposure by €28.9 million was registered in part through impairments. Another part had already been accounted for in its H1 market results.
The news source Observador reports that in February the bank tried to sell Gazprom debt, but failed to find a buyer under satisfactory conditions.
In addition to Russia, Novobanco also has small exposures to Bielorussia (loans worth €148,000) and Ukraine (€978,000). Exposure to the three counties therefore stand at around €20.74 million (they were at €49.2 million at the end of 2021)
Novobanco is not the only bank to have suffered losses from the fallout from the Ukraine war. Portugal’s mutual financial services company Grupo Montepio has accepted a loss of €15.6million from two Russian companies.
Caixa Geral de Depósitos (CGD) is exposed to Russia to the tune of €4 million and Ukraine by €1 million.
As to bank BCP, the CEO Miguel Maya has admitted that the institution had an “absolute immaterial exposure” to debt from Russian companies, both from Portugal and overseas operations” including the Polish bank Bank Millennium, so that from a credit risk point of view there is “no reason whatsoever for concern”.