Bank Stocks Plummet Amid Russian Bond Losses

Strategic Insights -

The rapid decline of bank stocks on Thursday can be attributed to a $110 million charge taken by Republic New York for losses in Russian government bonds. The majority of banks have minimal exposure to Russia, but NationsBank, set to merge with BankAmerica, has a notable exception, with $412 million invested in Russia. Despite this, the total assets of the new company will be $570 billion, making the investment a relatively small fraction of their overall assets.

Key Takeaways:

  • NationsBank has a significant investment in Russia, with $412 million invested in the country, but this is a small portion of their total assets of $570 billion.
  • The majority of major banks in the metro area have little to no exposure to Russia, except for NationsBank and BankAmerica.
  • NationsBank has a total exposure of about $1.6 billion in Asia and $3.2 billion in Latin America, representing around 1.6 percent of their assets.
  • SunTrust Banks has less than 1 percent of their loans in Canada and the U.K., with a total amount outstanding of $351 million.
  • First Union's foreign government bond portfolio constitutes around 8 percent of their investment portfolio, with over half of that coming from investments in Germany.
  • First Union's foreign division had unrealized gains of $50 million at the end of June.
  • Wachovia has no loans or equipment leases in Russia, with international loans and leases totaling $700 million out of total assets of $65 billion.

Statistics:

  • $110 million: the charge taken by Republic New York for losses in Russian government bonds.
  • $412 million: NationsBank's investment in Russia.
  • $570 billion: the total assets of the new company formed by the merger of NationsBank and BankAmerica.
  • $1.6 billion: NationsBank's total exposure in Asia.
  • $3.2 billion: NationsBank's total exposure in Latin America.
  • 1.6 percent: the percentage of NationsBank's assets invested in Asia and Latin America combined.
  • $351 million: the total amount outstanding, including loans, acceptances, and deposits at foreign banks for SunTrust Banks.
  • Less than 1 percent: the percentage of SunTrust Banks' loans in Canada and the U.K.
  • 8 percent: the percentage of First Union's investment portfolio that is foreign government bonds.
  • $3 billion: the value of First Union's foreign government bond portfolio.
  • $50 million: the unrealized gains of First Union's foreign division at the end of June.
  • $700 million: the value of Wachovia's international loans and leases.
  • $65 billion: Wachovia's total assets.

Sources:

  • Republic New York
  • Bloomberg News
  • NationsBank
  • BankAmerica
  • SunTrust Banks
  • First Union
  • Wachovia
  • The Wall Street Journal (not mentioned in the original text, but mentioned in the Bloomberg News contribution)