Russian chaos takes its toll on investment banks and the world’s largest asset manager

Players including Goldman Sachs, JP Morgan, Citi and BlackRock have reportedly lost billions in exposure as the Russian market continues to slide.

BlackRock, the world’s largest asset manager, has taken a hit of around $17 billion due to the ongoing chaos in the Russian market, the FT reported today. The news adds to a growing list of financial giants impacted from the Russian invasion of Ukraine, which has seen the rouble collapse, the Moscow Stock Exchange close, and a multitude of funds suspend or shut their doors.

BlackRock on 28 February suspended the purchase of all Russian assets, with Russian holdings reportedly falling to around 0.01% of its assets under management at a value of around $1 billion. The losses have risen sharply since then, however. Its biggest Russian ETF, ERUS, has seen its value fall from around $600 million to just $1 million over the past quarter.

Larry Fink, BlacRock CEO, noted in a LinkedIn post last week that: “This has been a highly complex and fluid situation, and BlackRock will continue actively consulting with regulators, index providers and other market participants to help ensure our clients can exit their positions in Russian securities, whenever and wherever regulatory and market conditions allow.”

Other major players have also been hit. On Thursday, JP Morgan and Goldman Sachs announced their withdrawal from the Russian market, claiming to be doing so in compliance with regulatory requirements. However, Goldman has been hit less hard, with exposure to Russian assets, reportedly, of just $650 million.

Citi is another bank to be hit by the crisis, and is currently in the process of winding down its Russian retail operation – a move started before the invasion. Although the bank has not yet announced any plans to exit its corporate business in the country, The TRADE has heard from market sources that its exposure to Russian assets could also be in the billions, with heavy markdowns possible. The bank’s emerging market fixed income trading desk has taken a heavy hit of around $100 million, according to reports, due to its Russian exposure – compared to losses of around $50 million apiece for the desks of Goldman Sachs and Societe Generale.

Most observers expect Russia-related trading writedowns to grow significantly over the coming weeks and months, due to the high volatility of asset prices, with mark-to-market positions changing rapidly. With the current uncertainty, and the frantic disengagement of most major players from their Russian positions, it’s likely that we will see losses continue to mount.