Nordea Says Russian Credit Quality Unaffected by Ruble

Nordea Bank AB, the Nordic region’s largest lender, said credit quality at its Russian unit remains unaffected by the country’s worst financial crisis since 1998.

“Our clients are relatively unaffected by the turbulence in Russia as we don’t finance their Russian operations,” Rodney Alfven, head of investor relations at Nordea in Stockholm, said by phone. “Of course, all else equal, this isn’t a good situation but we currently have good credit quality in Russia and, in principle, we have no bad loans to speak of.”

The ruble has collapsed about 40 percent against the euro this year, with policy makers in Russia resorting to extreme measures to halt the decline. The central bank increased its benchmark rate to 17 percent this week and spent more than $10 billion on interventions in December to protect the ruble.

While Nordea had total lending of 6.6 billion euros ($8.2 billion) and deposits of 1.3 billion euros in Russia at the end of the third quarter, more than 80 percent of its loans in the country are denominated in U.S. dollars and euros, making it less affected by the Russian ruble’s recent slump. It mainly lends in rubles to Nordic customers with operations in Russia and in euros and dollars to Russian companies, Alfven said.

Casper von Koskull, who heads Nordea’s wholesale banking, said in a Dec. 5 interview in Stockholm that it’s benefiting from European sanctions against Russia as a weaker ruble helps its profitability in the country. Nordea is “probably more profitable there today than ever before because of the lower ruble as our income is in dollars and euros,” he said.

While some banks in Russia have recently seen deposit outflows as customers wanted to buy capital goods, Nordea’s “customers are mainly large corporations and we haven’t seen any withdrawals from deposit accounts,” Alfven said.

“It’s a very serious situation and we follow it very closely and are in close dialogue with our customers in Russia,” Alfven said. “This situation is about being very close to the action and being able to handle the reality.”

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