RBS limits lending to Russia over Ukraine

Royal Bank Of Scotland. Picture: Greg Macvean

RBS said it had reviewed credit ratings, adjusted lending limits and placed additional credit restrictions on new business in Russia.

The bank is also reviewing how it is exposed to the international sanctions, which have been imposed against Russia by western countries.

The European Union cut off financing for five major Russian banks this week over Moscow’s support for separatist rebels in Ukraine. The measures aim to prevent Russian banks from raising money on Western capital markets.

In its half-year results published yesterday RBS, which is 81-per cent owned by the UK Government, said it had reduced lending in Russia during the first half of this year by £100 million to £1.8 billion.

Current RBS lending in Russia includes £900 million of corporate lending and £600 million of lending to banks.

The bank said its total Russian exposure, including assets held off balance sheet for clients, amounted to £2.1 billion pounds.

The report on today’s results added: “ Following developments in Ukraine, ratings were reviewed, limits adjusted and additional credit restrictions placed on new business. Exposures are also reviewed against any international sanctions.”

Sanctions

According to bank sources, the reduction in Russian lending has been done in order to ensure that RBS complies with sanctions and follows an assessment of the risks caused by the political situation in Ukraine.

The step was also taken, because it is in line with RBS’s intention to focus more on its business in the United Kingdom.

Pressure from the West intensified this week when the US President Barack Obama joined the EU in taking economic action following Vladimir Putin’s on-going support of Ukrainian separatists following the destruction of Malaysian Airlines flight MH17.

The US measures target weapons, energy and finance as welas three large banks: VTB Bank; OAO, Bank of Moscow and the Russian Agricultural Bank.

EU sanctions include a measure to deny Russian state-owned banks access to the European capital markets and the banning of future arms contracts.

RBS’s stance was welcomed by politicians. The leader of the Scottish Lib Dems Willie Rennie said: “Vladimir Putin has pushed the patience of the international community and Nick Clegg was right to say that we

need a package of measures to put pressure on Russia after recent events in Ukraine.

“With the EU already taking action to cut lending to Russian banks, the steps that RBS, as a part-nationalised bank, has now taken to follow suit are welcome. President Putin needs to know that acting like a playground bully in Eastern Europe will not be without consequences.”

The half-year results showed that RBS had made a net profit of £1.42 billion in the first half of the year - up from £535 million in 2013.

Half-year results also showed pre-tax profit nearly doubled to £2.65 billion.

RBS was rescued by the British government during the 2008 financial crisis and remains 81 percent taxpayer-owned.