Russia Exposure in Revenues and Reputation Trickle Out in US Company Filings

The old saying goes: It takes decades to build a company’s reputation.

And it takes seconds to destroy it.

To put a spin, a bit, on those statements: It can take a few weeks of war to destroy a reputation.

The war in Europe, and in particular, firms’ exposure to Russia, shows just how interconnected global commerce truly is. In recent weeks, a number of companies have detailed their operations in the region, in many cases the revenue contribution, and their strategies in dealing with it all.

Some companies, like Airbnb and FedEx, have suspended operations in Russia. Some companies, such Apple, which has suspended sales there, too, have set off speculation about how much top-line exposure might be tied to the country (news reports have pegged Apple to lose as much as $3 million daily from its Russia pause, less than 1% of the total top line).

Read also: Apple Suspends Sales in Russia

There are any number of online lists that are circulating across the web, such as on offer from the Yale School of Management, that show hundreds of companies that have said they’d exit the country, suspend operations, or possibly stay put.

Coca-Cola’s bottler Coca-Cola HBC has said that it gets about 20% of its top line and profits.

But perhaps the biggest question might lie with the banks and the payments firms themselves — the conduits to financing that keep the companies humming, so to speak. Lending is the lifeblood for the banks, yes, but also, to an extent, the economies in which they are housed.

Payment Networks and Banks

As noted in this space in recent weeks, payments networks Visa and Mastercard detailed their own exposures. Visa said at the beginning of the month in a filing with the Securities and Exchange Commission (SEC) that 4% of its annual top line — equivalent to about $964 million — was derived from Russia, and 1% came from Ukraine. Mastercard said in its own SEC filing that 2% of revenues are tied to Ukraine and 4% come from Russia-related payments.

U.S. banks have been detailing their own exposure. Citi, for example, said in its SEC filings that $9.8 billion, which would include about $5.5 billion in loans on the books, or about 30 basis points of the total loan exposure. Other exposures not in those loan amounts, the bank said, include $1 billion of cash and placements with the Bank of Russia and other financial institutions and $1.8 billion of reverse repurchase agreements.  The Bank of International Settlements has estimated that U.S.  banks have about $14.7 billion in total exposure to the country, with as much as $6.2 billion are claims that are due within the year (as measured to September 2022). Goldman has said that net credit exposure to Russia is $293 million, and total market exposure is $414 million.

The clock is ticking and the repercussions — both monetary and reputational — remain to be seen.