The logo of the European Central Bank (ECB) is pictured outside its headquarters in Frankfurt, Germany December 8, 2016. REUTERS/Ralph Orlowski

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  • Enria sees an average impact of 75 to 90 basis points for the 9 most exposed banks
  • No bank would see its capital reduced by more than 200 basis points

FRANKFURT, April 20 (Reuters) – All major euro zone banks can afford a complete cancellation of their exposure to Russia while meeting their capital requirements, European Central Bank chief supervisor Andrea Enria said. in a letter published Wednesday.

Russia’s invasion of Ukraine and subsequent Western sanctions have already forced the European units of some Russian banks to close and caused some European lenders to leave Russia or consider doing so.

Enria said exposure to Russia was concentrated in nine banks, but even they could face an annihilation of their direct cross-border links with their Russian counterparts and capital held in subsidiaries located in Russia.

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“All banks involved would retain sufficient leeway with respect to minimum and buffer requirements,” Enria said in the letter to members of the European Parliament.

He said the nine banks would see their capital reduced by 70 to 95 basis points on average in the event of a write-off and that for none of them the hit would be more than 200 basis points.

He added that the ECB was closely monitoring the banks’ implementation of sanctions against Moscow and warned of the indirect risks of the war, ranging from a resulting economic slowdown to volatility in the commodity market.

“Supervisors are in regular contact with affected banks to monitor their risk profiles, assess their reactions and identify vulnerabilities at an early stage,” Enria said.

The ECB supervises the 115 largest banks in the euro zone.

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Reporting By Francesco Canepa; Editing by Edmund Blair, William Maclean

Our standards: The Thomson Reuters Trust Principles.

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