Goldman Sachs on Thursday became the first major US bank to say it would leave Russia after Western governments imposed a series of sanctions designed to cripple the economy. Hours later, JPMorgan Chase, the largest bank in the United States, said it was winding down there too.
Although US banks had largely withdrawn from direct dealings with Russia in recent years, Goldman, JPMorgan and others still had limited operations to serve companies there. But the Russian invasion of Ukraine has prompted many international companies ranging from McDonalds to Apple to shun the country.
“Goldman Sachs is ending its operations in Russia in accordance with regulations and licensing requirements,” Andrea Williams, a spokeswoman for the bank, said in an email. “We are focused on supporting our customers around the world in managing or terminating pre-existing obligations in the marketplace and ensuring the well-being of our people.”
Goldman has about 80 employees in Russia and is arranging the departure of those who have asked to leave, Ms Williams said, confirming an earlier report from Bloomberg News. Some employees of Goldman’s legal and compliance departments will remain in the country to perform any necessary work permitted under sanctions issued by the United States and its allies.
JPMorgan, which has assets for some customers in the country, is “winding down Russian business” and is not pursuing any new ventures there, Joseph Evangelisti, a company spokesman, said in a statement. The bank’s run-down operations will also include managing Russia-related risks to customers and helping employees, he said. It has more than 100 employees in the country.
According to a recent registration filing, Goldman Sachs had more than $700 million in exposure to Russia at the end of 2021, linked to loans and financial products such as stocks and bonds. That’s just a tiny fraction of the bank’s $1.5 trillion global business.
JPMorgan’s operations in Russia were not large enough to rank in the top 20 markets, according to a recent registration application. Market No. 20 on the list was Mexico, with an exposure of $4.9 billion. The bank has total assets of $3.7 trillion.
“None of us can’t see this for what it is: the invasion of a sovereign state,” Goldman CEO David M. Solomon said in a memo to employees Thursday. “Hundreds of thousands have been forced to flee their homes, Ukrainian cities have been massively destroyed and there has already been tragic loss of life. I know this remains an extremely discouraging and difficult time for many of our people.”
US and Western banks have withdrawn from Russia since 2014, when the United States imposed sanctions following President Vladimir V. Putin’s annexation of Crimea. The only major US bank to maintain a significant presence was Citigroup, which has approximately 3,000 employees there. Citigroup said on Wednesday it would “assess our operations in the country.”
Citi’s consumer division in Russia has limited operations; the bank put the company up for sale as part of a broader exit from overseas markets announced last year. According to a filing, the bank had $9.8 billion in exposure to Russia at the end of 2021, including corporate and consumer loans and debt securities issued by local governments. It’s working to reduce that, Mark Mason, Citi’s chief financial officer, told investors last week.
The war between Russia and Ukraine and the world economy
The most recent economic penalties for Russia could have far-reaching indirect effects due to the size of its economy and its international ties. The country is a major exporter of commodities such as oil, natural gas and wheat.
Citigroup is also the only US bank with operations in Ukraine. It had more than 200 workers there and helped those who wanted to leave to cross the border into Poland, Citigroup CEO Jane Fraser said last week.
