The French bank Société Générale has taken a €525m write-down on its Russian business in the first quarter of 2013, amid a weakening rouble and slowing economy.
However, a spokesperson for the bank tells IBTimes UK that it has no intention of pulling back from a market in which it has invested extensively in recent years, despite escalating tensions between Russia and the west.
Just last month, the bank increased its stake in Rosbank, its Russian lending vehicle, to 99.4%. Approximately 3.5% of Société Générale's total credit lines are owned by Rosbank.
The 7% share purchase came with the following statement: "Société Générale's commitment to Russia is part of a long-term vision based on the belief that economic ties between Europe and Russia will strengthen and that the Russian banking sector has a strong growth potential."
Société Générale – France's second largest bank – has invested more than most western banks in Russia and, thus, has potentially more to lose from a Russian downturn.
The IMF has warned that Russia has already entered recession, with some banks being forced to abandon deals due to the involvement of sanctioned individuals.
The Bank of America and the Royal Bank of Scotland withdrew from a syndicated loan deal for Russian gas giant Sibur after one of its shareholders was sanctioned by the US.
Despite the negative economic outlook, Société Générale (through Rosbank) has actually increased deposits in Russia by 13% over the quarter, with Russian lending rising by 6%.
The bank refused to comment on its risk management strategy, regarding sanctions.
Last year, Rosbank's Russian CEO Vladimir Golubkov was fired after he was arrested on bribery charges.
Despite a revenue rise of 14% over the first quarter, Société Générale reported an overall drop in profit of 13.3%.