U.S. Banks Have Limited Exposure
LONDON - U.S. and other Western banks have only minimal exposure to the Soviet Union and will not suffer any major fallout from the overthrow of President Mikhail Gorbachev. But any new lending to Moscow is highly unlikely.
"I don't see events in the Soviet Union harming most banks, even if we see a full-scale civil strife," said Michael Hartnett, economist at Britain's J. Henry Schroder Wagg investment bank.
U.S. banks account for $500 million of the $30 billion Western banks have in loans outstanding to the Soviet Union, according to IBCA Ltd., a British rating agency.
The Largest Lenders
German banks, reflecting their nation's close business ties with the U.S.S.R., are the largest lenders to Moscow with a total loan exposure of $22 billion. That includes almost $10 billion loaned by former East German banks. However, most of the outstanding West German bank credits are government guaranteed.
French and Japanese banks are the second- and third-biggest lenders to Moscow, with $5.6 billion and $4.5 billion of loans outstanding respectively.
The main downside from the coup in Moscow, Mr. Hartnett said, is that the flow of public and private Western capital to the Soviet Union will become "even more cautious" in the future.
The new regime could find itself in virtual economic "quarantine" if banking and financial-system payments to the West were disrupted or stopped, bankers privately suggested.
Indeed, fallout from the coup began emerging Monday. In Washington, a World Bank spokesman said the bank has postponed planned discussions on a new $30 million fund to finance technical help to the Soviets because of the "current uncertainty."
Western bankers have indicated in recent months that they expect their governments and agencies - such as the newly established European Bank for Economic Reconstruction and Development - to bear the main burden of financing the East Bloc's push for Western-style economic restructuring.
Table : Gross Loans to U.S.S.R. By Commercial Banks
In billions of dollarsGermany $21.9France 5.6Japan 4.5Italy 4.4Austria 3.5U.K. 3.4Switzerland 2.9Netherlands 2.1U.S. 0.5
Data based on central bank statistics and includes state guarantees or credit insurance, leaving the actual exposures to banks in some countries significantly smaller than the gross amount shown.