Financial Sector on High Alert Amid Ukraine Crisis

Banks Expanding into Neighboring Eastern Europe Continue Monitoring Situation Developments

[Image source=Yonhap News]

[Asia Economy Reporter Song Hwajeong] As the Ukraine crisis escalates to a critical point, the financial sector is also on edge. Banks operating in Eastern Europe, adjacent to Ukraine, are closely monitoring the situation.

According to the financial sector on the 23rd, no banks have directly entered Ukraine, but Woori Bank and Shinhan Bank have offices in neighboring countries such as Poland and Hungary. In Russia, Woori Bank and Hana Bank have local subsidiaries, and KDB Industrial Bank also has an office in Russia and a local subsidiary in Hungary.

For countries neighboring Ukraine, in the event of a Russian invasion of Ukraine becoming a reality, these locations could serve as evacuation routes, so thorough monitoring of local conditions and ensuring the safety of local employees is a priority. Additionally, they are reviewing financial trends including exposure related to Russia and Ukraine.

A Shinhan Bank official stated, "Liquidity-related ratios such as the foreign currency Liquidity Coverage Ratio (LCR) and foreign currency stress tests are monitored daily, including overseas branches, and the short- and long-term foreign currency liquidity status and borrowing conditions are continuously checked. Regarding ruble settlements, we maintain close communication with foreign banks where our accounts are opened for foreign exchange operations and continuously monitor for potential issues related to settlements."

A Hana Bank official explained, "The local subsidiary in Russia is preparing for crisis situations regardless of the local atmosphere. We continuously share information with the local embassy and other financial institutions, and as tensions are expected to persist, we continue to monitor related risks." Woori Bank has also established a 'contingency plan' to support overseas branches in case of a crisis and is continuously monitoring the Ukraine situation.

An Industrial Bank official said, "Our exposure to Russia is not significant, so the impact is limited. However, if the financial market is shaken, volatility in foreign currency assets could increase, so we are keeping a close watch on this."

Financial authorities also expect the direct impact to be limited but are on high alert regarding potential future developments. A Financial Supervisory Service official explained, "Domestic banks' exposure to Russia is about 0.4%, which is not large, and trade transactions are not a significant portion, so the direct impact is expected to be minimal. However, if the situation spreads to Europe, the impact could expand, and there could be indirect effects such as rising raw material prices, so we are continuously monitoring the situation."

This content was produced with the assistance of AI translation services.