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Credit Suisse was caught trying to shred evidence of Russian loans backed by yachts. The bank just revealed it has given $1.7 billion to the country’s borrowers

March 10, 2022, 7:10 PM UTC

Embattled global investment bank Credit Suisse was recently revealed to have requested investors to shred evidence linking the institution to business dealings with Russian oligarchs. Now it’s showing just how deep its connections with Russia go.

In its annual report for 2021 released on Thursday, the bank revealed a gross credit exposure to Russia of 1.57 billion Swiss francs, almost $1.7 billion. Sanctions placed on Russian businesses and individuals following the country’s invasion of Ukraine means that it is uncertain if these parties will be able to pay back their international loans. So $1.7 billion is how much Credit Suisse could lose if borrowers in Russia are unable to repay the bank.

The $1.7 billion is Credit Suisse’s gross exposure, although its net exposure is somewhat smaller at 848 million Swiss francs, or $912 million. The net sum takes into consideration the bank’s collateral and financial hedges that helped mitigate risk. Neither the gross nor the net sum includes the 195 million Swiss francs’ worth of assets that Credit Suisse holds in Russia, which could also be affected by sanctions. 

Credit Suisse says its risk exposure to Russia is mainly composed of “corporate and institutional loans, trade finance activities, and derivative exposures,” and sought to reassure investors that the bank had “minimal total credit exposures toward specifically sanctioned individuals managed by our wealth management division.”

In a statement released Thursday alongside the report, Credit Suisse Group CEO Thomas Gottstein condemned Russia’s invasion and insisted that the bank’s exposure in relation to Russia was “well-managed.” Gottstein also indicated that the bank will comply with all sanctions imposed by the U.S., the EU, and Switzerland.

In a statement to Fortune, Credit Suisse declined to comment beyond the details already disclosed in the annual report and other public statements.

Credit Suisse is “unable to comment beyond what we have disclosed in public statements,” a bank spokesperson said. Another spokesperson told Fortune that the bank “cannot comment on potential client relationships.”

Several other banks have incurred significant credit exposure risks as a result of Western sanctions on Russia. Fellow Swiss investment bank UBS recently revealed an exposure of $634 million, while Italian bank UniCredit said that its losses could total as much as 7 billion euros, should an “extreme scenario” emerge in which all of its Russia-based assets are wiped out by sanctions. Europe’s largest banking group, the French BNP Paribas, has also announced a credit risk exposure of $3.3 billion to Russia and Ukraine

In the past few months, Credit Suisse has had to deal with several scandals, including a leak alleging business dealings with international drug lords and corrupt regimes. The bank has also been hit by big losses from its clients, including one case in which the bank lost $5.5 billion from failed investment firm Archegos, and another instance where Credit Suisse refused to release information regarding its $10 billion dealings with failed businessman Lex Greensill.

Last week, reports emerged that Credit Suisse contacted hedge fund managers and other investors asking them to “destroy and permanently erase” evidence linking the Swiss bank to loans issued to U.S.-sanctioned Russian oligarchs for luxury items including yachts and private jets. 

I don’t think we’ve ever had a request like this,” one investor who received the letter told the Financial Times.

Following the Financial Times report, Credit Suisse released a statement that the request was common practice.

“Reminding parties to destroy confidential information is good housekeeping and good data hygiene. The transaction and the request to nonparticipating investors to destroy confidential data are entirely unrelated to the ongoing conflict in Eastern Europe.”

Some international investment banks may start to leave Russia soon. On Thursday, Goldman Sachs became the first major Wall Street firm to shut down its Moscow offices and leave the country.

But European banks have much deeper ties with Russia than American ones, making a decision to permanently close down operations in the country difficult. As of Thursday evening, Credit Suisse’s Moscow offices remain open, with around 125 employees working across its wealth management and investment bank departments.

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