Societe Generale SA and Credit Suisse Group AG halted the finance of commodities trading from Russia as the Ukraine war fueled concerns about the widening impact of sanctions, according to people familiar with the matter.
The two banks, key financiers to commodity trade houses, are no longer providing the money needed to move raw materials such as metals and oil from Russia, said the people, who asked not to be named because the information is private. Banks are concerned future sanctions could include energy or a total expulsion of Russia from the SWIFT system of international payments.
Western nations agreed to impose new sanctions to further isolate Russia’s economy and financial system after initial penalties failed to persuade President Vladimir Putin to withdraw his forces from Ukraine. A decision to penalize Russia’s central bank and exclude some lenders from the SWIFT messaging system, used for trillions of dollars worth of transactions around the world, was announced Saturday in a joint statement by the U.S. and European allies.
For now, the sanctions haven’t targeted Russia’s energy supplies. Just after Russia invaded Ukraine, oil broke through $100 a barrel, European natural gas surged by a record 62% and aluminum hit a record. The decision by Societe Generale and Credit Suisse to cut financing was made before the new round of sanctions on SWIFT, the people said.
The lenders are not alone in curbing financing for commodities trading. Dutch banking giants ING Groep NV and Rabobank are restricting lending to deals involving movement of commodities from Russia and Ukraine, and Chinese banks are also pulling back.
Societe Generale will keep its office in Russia open as that’s a separate operation from the rest of the bank, while Credit Suisse will consider financing units of Russia companies outside the country on a case by case basis, the people said.
Societe Generale and Credit Suisse declined to comment.
