Exposure to Russia in terms of income and reputation

The old saying goes: it takes decades to build a business reputation.

And it takes seconds to destroy it.

To give these statements a bit of a twist: it can take a few weeks of war to destroy a reputation.

The war in Europe, and in particular corporate exposure to Russia, shows how truly interconnected global trade is. Over the past few weeks, a number of companies have detailed their operations in the region, in many cases revenue contribution, and their strategies for dealing with it all.

Some companies, like Airbnb and FedEx, have suspended operations in Russia. Some companies, like Apple, which has also suspended sales there, have speculated about how much high-profile exposure the country might have (reports have estimated that Apple will lose up to $3 million). dollars per day due to its break in Russia, less than 1% of total turnover).

Read also: Apple suspends sales in Russia

There are a number of online lists circulating the web, such as those offered by the Yale School of Management, which show hundreds of companies that have said they will leave the country, suspend operations or possibly stay put. .

Coca-Cola bottler Coca-Cola HBC said it gets about 20% of its revenue and profit.

But perhaps the bigger question is about the banks and payments businesses themselves — the funding conduits that keep businesses running, so to speak. Lending is the lifeblood of banks, yes, but also, to some extent, of the economies in which they are housed.

Payment networks and banks

As reported in this space in recent weeks, payment networks Visa and Mastercard have detailed their own exposures. Visa said earlier this month in a filing with the Securities and Exchange Commission (SEC) that 4% of its annual revenue – the equivalent of about $964 million – comes from Russia and 1% comes from ‘Ukraine. Mastercard said in its own filing with the SEC that 2% of revenue is Ukraine-related and 4% comes from Russia-related payments.

US banks detailed their own exposure. Citi, for example, said in its SEC filings that $9.8 billion, which would include about $5.5 billion of on-book loans, or about 30 basis points of exposure total loans. Other exposures not included in those lending amounts, the bank said, include $1 billion in cash and investments with the Bank of Russia and other financial institutions and $1.8 billion in loan agreements. repo. The Bank for International Settlements has estimated that U.S. banks have about $14.7 billion in total exposure to the country, with up to $6.2 billion in claims due within the year (as measured through September 2022). Goldman said Russia’s net credit exposure was $293 million and total market exposure was $414 million.

Time is running out and the repercussions, both monetary and reputational, remain to be seen.

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