Goldman Sachs is the first major US bank to pull out of Russia

Goldman Sachs on Thursday became the first major U.S. bank to announce it would leave Russia after Western governments imposed a series of sanctions designed to cripple its economy. A few hours later, JPMorgan Chase, the largest bank in the United States, declared that it was also ending there.

Although US banks have largely withdrawn from direct dealings with Russia in recent years, Goldman, JPMorgan and others have maintained limited operations to serve businesses there. But Russia’s invasion of Ukraine prompted many global companies ranging from McDonalds to Apple to flee the country.

“Goldman Sachs is ending its operations in Russia in accordance with regulatory and licensing requirements,” Andrea Williams, a spokeswoman for the bank, said in an email. “We are focused on supporting our clients around the world in managing or closing pre-existing obligations in the market and ensuring the well-being of our associates.”

Goldman has around 80 employees in Russia and is arranging the departure of those who have asked to leave, Ms Williams said, confirming an earlier report by Bloomberg News. Some employees of Goldman’s legal and compliance divisions will remain in the country to perform any necessary work authorized by the sanctions decreed by the United States and its allies.

JPMorgan, which holds assets for some clients in the country, is “unwinding Russian business” and not pursuing new business there, Joseph Evangelisti, a spokesman for the company, said in a statement. The bank’s scaled-down operations also include managing Russia-related risks for customers and helping employees, he said. It has more than 100 workers in the country.

At the end of 2021, Goldman Sachs had more than $700 million of exposure to Russia, linked to loans and financial products like stocks and bonds, according to a recent regulatory report. deposit. That’s just a small part of the bank’s $1.5 trillion global operations.

JPMorgan’s business in Russia was not large enough to rank among its top 20 markets, according to a recent regulatory filing. The No. 20 market on its list was Mexico, with exposure of $4.9 billion. The bank has total assets of $3.7 trillion.

“None of us can fail to see this for what it is: the invasion of a sovereign state,” Goldman chief executive David M. Solomon said in a memo to employees Thursday. “Hundreds of thousands of people have been forced to flee their homes, Ukrainian cities have suffered massive destruction and there has already been tragic loss of life. I know this remains an extremely daunting and difficult time for many of our people. »

American and Western banks have withdrawn from Russia since 2014, when the United States imposed sanctions after President Vladimir V. Putin annexed Crimea. The only major U.S. bank to maintain a significant presence was Citigroup, which has approximately 3,000 employees. Citigroup said Wednesday it would “evaluate our operations in the country.”

Citi’s consumer division in Russia runs limited operations; the bank has put the company up for sale as part of a broader exit from overseas markets announced last year. The bank had $9.8 billion in exposure to Russia at the end of 2021, including business and consumer loans and local government debt securities, according to a deposit. It is working to reduce that, Mark Mason, Citi’s chief financial officer, told investors last week.

The latest economic sanctions against Russia could have far-reaching indirect consequences due to the size of its economy and its international ties. The country is a major exporter of raw materials like oil, natural gas and wheat.

Citigroup is also the only US bank operating in Ukraine. There were more than 200 workers and were helping those who wanted to leave to cross the Polish border, Citigroup chief executive Jane Fraser said last week.

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