Financial ETFs slide as Citigroup discloses Russia exposure


you.S. stock markets and exchange-traded funds are not completely immune to events in Russia.

For example, exchange-traded funds linked to the financial and banking sector are affected by Citigroup Inc.’s (NYSE: C) exposure to Russia.

Monday, the Selected Financial Sector SPDR (NYSEArca: XLF) was down 2.2%, and the Invesco KBW Bank ETF (NASDAQ: KBWB) fell 2.0%.

Meanwhile, Citigroup shares plunged 5.3% on Monday. Citigroup represents 7.8% of the underlying portfolio of KBBW and 3.0% of XLF.

Citigroup shares fell after the company revealed it had nearly $10 billion in total exposure to Russia at the end of 2021, coming under indirect fire from global sanctions on the Russian economy following its invasion of Ukraine, reports the Wall Street Journal.

As Western sanctions have targeted Russia’s biggest banks, oligarchs and corporations to single out Russian President Vladimir Putin for his actions against Ukraine, Citigroup finds itself exposed with a presence on the ground in Russia and Ukraine, which includes $2.2 billion in business loans, $700 million in consumer loans and $1.5 billion in investment securities. Citigroup units around the world also hold $1.6 billion in other Russian entities.

Along with these loans and investments, Citigroup disclosed that it held $1 billion in cash in financial institutions such as the Central Bank of Russia and $1.8 billion in reverse repurchase agreements with others.

The only saving grace was that Citigroup halved its exposure to Russia after Russia’s forced annexation of Crimea in 2014, and the bank, along with others, refrained from making bigger plays. on Russia ever since.

“Citi continues to monitor the current geopolitical and economic conditions between Russia and Ukraine and will mitigate its exposures and risks as appropriate,” the bank said.

Additionally, Citigroup has worked to ensure the safety of some 200 of its employees in Ukraine and said it had already evacuated foreign workers to Ukraine before the Russian invasion.

In a research note published on Monday, Oppenheimer analysts argued that US banks’ exposure to Russia was “limited”, reports the Financial Times.

“The most difficult issue to understand is indirect exposure, given that many European banks (particularly French, Italian and Austrian) have much larger exposures and could clearly be hit much more severely,” the analysts said. .

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