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Marc Rubinstein

Will Western Banks Walk Away From Russia?

Small exposures can translate into big losses for lenders stuck in the stricken economy.

Citigroup still has a few branches in Russia.

Citigroup still has a few branches in Russia.

Photographer: Bloomberg/Bloomberg

Banking is an asymmetric business. You make modest amounts of money most of the time and then occasionally you suffer extraordinary losses. A small fraction of your assets going bad can trash a material percentage of your earnings.

This is the reality many banks face as they size up their exposure to Russia. European bank stocks, in particular, have suffered steep declines since the invasion in Ukraine began, and the cost of insuring their debt has risen.