How eight banks assess the fallout from the war in Ukraine

Russia’s invasion of Ukraine two weeks ago quickly upended a wide range of global industries – from energy for entertainment for fast food.

In the financial services sector, some of the biggest impacts have been on payment companies. Last weekend, Visa, Mastercard, American Express and PayPal all bans announced in Russia.

There have also been massive repercussions for Russian banks. Economic sanctions imposed by the United States and other countries have frozen large parts of Russia’s financial system, including its access to the Society for Worldwide Interbank Financial Telecommunications, which processes international payments.

So far, the ripple effects for North American banks, which typically have little or no direct exposure to Russia, have been much weaker. But if the war in Ukraine drags on, some indirect risks will become more likely to have a significant impact on the U.S. banking sector, according to DBRS Morningstar analysts.

“One of the concerns of the U.S. banking system is the potential for higher inflation for a longer period, especially given the recent spike in energy prices,” wrote DBRS Morningstar analysts John Mackerey and Michael Driscoll in a research note this week. “If this is prolonged, it could lead to weaker measures of longer-term asset quality.”

Since Russia’s invasion on February 24, the heads of numerous American and Canadian banks have spoken publicly about the impacts of the war and its economic fallout. These impacts include both short-term effects, such as trade volatility, and potential longer-term effects, such as a scenario in which high inflation persists.

What follows is an overview of what the executives of eight major regional banks have said recently about the impact of the conflict on their businesses.

About Harold Shirley

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