Restrictive measures of the Council of the European Union and other sanctions against Russia in response to the crisis in Ukraine / War in Ukraine - Economic consequences / risks and uncertainties

15 March 2022

In relation to the latest developments in Russia and Ukraine, Hellenic Bank Public Company Limited (the “Bank”) provides the following update:

  • The Bank does not have any commercial banking operations in Russia nor in Ukraine, other than two representative offices in Russia and one in Ukraine.  These representative offices are not licenced to offer any banking services and their sole role is for administrative support.
  • The Bank has zero exposure to the Russian sovereign and to Russian banks currently under sanctions.
  • Balances with subsidiaries of European banks in Russia amount to c. €20 mln, all with maturities of less than one week.
  • Lending exposure to Russian or Ukrainian individuals or to companies with Russian and Ukrainian ownership through the Bank’s International Business Centres in Cyprus amounts to a net book value of c. €35 mln.  The vast majority of this lending exposure is collateralised with assets in Cyprus, with the source of repayment coming from Cyprus.
  • Customer deposits related to Russian and Ukrainian customers account for c. 8% of total customer deposits, which exposure is not material compared to the Bank’s overall strong liquidity position, with a Liquidity Coverage Ratio of 499% (compared to a minimum requirement of 100%) as of December 2021.
  • In terms of indirect exposure, the Bank acknowledges the likely impact on the Cypriot economy mainly due to the links of the international business services sector, the tourism industry and the real estate market with Russia and Ukraine, as well as the possible inflationary pressures due to higher prices in energy, raw materials and agri-food products.  Any such impact could affect the Bank’s financial performance through likely lower revenues depending on any economic activity deceleration and possible higher impairment charges as domestic borrowers may have difficulties in servicing their obligations.
  • The Bank is taking all necessary and appropriate measures to manage all related risks and to comply with the applicable sanctions imposed on Russia.  The monitoring of customers has intensified, while transactions are strictly monitored and vetted accordingly.

In conclusion, the Bank expects limited impact from its direct exposure, while any indirect impact will depend on the longevity and severity of the crisis and its impact on the Cypriot economy, which remains uncertain at this stage.

The Bank will continue to monitor the situation, taking all necessary measures to mitigate the impact on its operations and financial performance.  Furthermore, once there is more clarity of the impact on its financial performance, the Bank will proceed with further updates if and when necessary.