Raiffeisen Bank International AG (RBI) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, and welcome to the Russia-Ukraine Update Conference Call of Raiffeisen Bank International. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Johann Strobl, Chief Executive Officer. Please go ahead, sir.

Thank you very much. Good evening or good afternoon, ladies and gentlemen. It's not so long ago that we had a call, but since then, the situation in Ukraine and Russia has changed dramatically. And you probably and for sure, follow all the events, what's ongoing in the country, on the ground, in Europe, all over the world. But I think it still deserves a special focus on our activities in these 2 countries. And I assume you will have many questions as well. So what we want to do, so we, meaning, Hannes Mosenbacher and myself, that we give you a short update on what's going on in the country -- in the countries. And then also give you a reminder and more details on our activities and our exposure in the 2 countries and also the recent developments. And then of course, we -- it's unavoidable that we also talk a little bit about sanctions and how we see it. Also, we assume that you are well aware. Still, I think it's worth to have also spend a few minutes on this. And then, of course, we will be open to your questions. And if we now move to the overview picture. So when talking about the 2 banks, let me start with the operations of the 2 banks. Of course, the situation is very, very different between the 2 countries. In Ukraine, there are fightings developing every day in different areas. And you probably have the map in your mind or you constantly look it up, so you have an idea of what it means. And what we try is, as banking is a substantial infrastructure, critical infrastructure, we try to keep the bank operating as good as possible. And when I mean as good as possible, then we are talking about the basic services for customers. And of course, this is, to a large extent, for private individuals to do their daily banking to get access to cash. And for the companies, it's also to provide cash to their customers and to their employees, especially. And I think I can say that we are doing very well like other banks as well, but I think our people do an exceptional job. It's the case that every day and changing even within that day, we have to adjust the opening hours. So we have to open, to close branches also during the day. But the majority of the branches is in operation and are working. And what -- of course, what we try is to convince the people, and also there are customers and also the retailers that they accept also digital money, the cards, because you can imagine in areas where fightings are ongoing or transports driven by military and then cash transport is not that easy. And so it might be that in one way or the other, the other bank, you also might see branches, I want to say, you might experience the one or the other day, shortages and then we try to refill as quick as possible. When talking about digital and IT, I think, here, the biggest concern is as the conflict is rather in the East and in the South, and more and more coming from the north to Kyiv, that we try to relocate some of our IT operational centers and some of the staff to other areas, so that in -- in case of damages, and of course, this can be that one of the IT centers might be hit as well, we still can operate. I mean since the pandemic, of course, people are used to work also from home, and this makes it, if I can say so, in the country possible to keep the operations going as it is. The National Bank of Ukraine have -- has imposed a couple of restrictions on cash withdrawals, also on FX limits. And yes, they also have forbidden withdrawals for Russian citizens. And of course, like in any country, we have to obey these regulations. This is the status in the Ukraine. And when talking about Russia, the situation, of course, is very different. As in Russia, it's more about how to deal with the new developments, how to deal with the -- in the recent days with the impact of the sanctions. But you have also seen that also Russia has taken a couple of measures, and they have to be understood and heavily discussed and then to be adjusted. And as I -- as I explained now, it's more to keep the operations, and it's not about new lending. So in these days, there is no new lending in the countries. I mean there always will be exceptional cases where there is a need or a specific situation. But on a broad base, you should not expect that lending is ongoing. And of course, one never knows in which direction the further developments will be. So probably it's also not a surprise that uncommitted lines are canceled and of course, given the difficulties in the country, in Ukraine, it's probably also not a surprise that we offered payment holidays to our retail customers for the next 2 months so that they can focus on their daily life and on their safety. Moving to the next slide. This is the introduction or the reminder to Russia. What you see here is probably some information what you might consider when thinking about very bad scenarios. And of course, what we have is an equity, just as a reminder, equity and other capitals like AT1 or so of EUR 2.4 billion. The bank is self-funded. So there is no parent funding in addition to this. The bank has a loan portfolio to customers of EUR 11.6 billion, which is a little bit more than 11% from the group loan portfolio. And the total capital in Russia is 13.6%, whereas the capital requirement is 11.5%. I did say that Russia is self-funded and you see it on the ratios that liquidity situation is very, very good. And you also can see that and you remember that throughout the difficult years, the resilience to negative developments of the Russian Bank was always very strong. And throughout all the years, we had an ROE of above 20%, which is always a good sign when you had in a difficult situation. And as I said, I do it together with Hannes. So I hand over to Hannes, and he will talk about the exposure.

Good afternoon also from my side, and thanks for participating. Now let me give you some details on the portfolio, and this slide is well known to you. But just to remind you that the biggest part of the portfolio is anyway in local currencies, 95% of revenues are being generated in Russia. I'm now with the fourth bullet talking about our Russian exposure cross-border. So this is the exposure being booked at head office with the country of residence, Russia. And it has a very short maturity and running off quickly. As we have shared with you, that we have already in 2019 and in 2021, we have in total built provisions of EUR 60 million to cover respective sanctions. I was sharing with you last time that we have a hedge position being setting up at EUR 1.4 billion. And what is very important for me to emphasize here, after now the style on sanction language over the weekend and every day coming in new sanctions, currently, only 1% of our total exposure is directly affected by these sanctions. So we have a portfolio 99%, which is not affected. If I would now go to the left part of this presentation, you can see that we are locally serving retail clients and corporate clients. What you can see on the right-hand side of this pie chart is what, of course, you would also expect as usual banking operation to manage your liquidity. So you have some exposure to the Russian sovereign. Of course, the local central bank is for us an important counterpart to manage our local liquidity. And then you can also see that we are exposed to the local stock exchange and other foreign FIs. Johann, back to you on Ukraine.

Yes. Thank you, Hannes. I mean you know the bank, it's in dimension. It's different. It's -- our equity, and here, please be aware that the total equity of the bank is, of course, much higher, but you know that we have minorities, and we have with [ FIBERTI ] a big co-shareholder. So this is only our part is the EUR 320 million of equity what we have. Again, the bank is very, very liquid and well-funded locally. So there is no parent funding from Vienna. The loan portfolio is EUR 2.2 billion, which is 2.2% of the group loan portfolio, that's capitalization of the bank is 13.7%, whereas the local capital requirement is 10%, and you see the LCR, this is an enormous high number. And I hand back to Hannes.

Thank you, Johann. Also here, maybe, some details. As we always have shared with you that currently retail lending is done only in local currency. I know that some of you may remember, maybe even using the 2014 scenario as a reference. But what is this time extremely different is that this time, retail lending only took place in local currency. And if you look at the total distribution of financing, 80% is being done in local currency. Consistent, of course, with the mentioned LCR, we are extremely liquid, having 65% of the loan-to-deposit ratio. And also here, I was sharing with you on the fourth bullet by the year-end presentation that we already have allocated some EUR 25 million of provisions given the current geopolitical risks what we have faced with the year-end. Johann?

Thank you, Hannes. Now I would quickly move through the many sanctions, and we have tried to structure it somehow. So what you have is -- and this is a number of people is increasing almost every day. So what we have is asset freezes and travel restrictions. And here, I can say that the 3 big ones U.S., Europe and U.K. are aligned with only little differences in the time when they come and in the people. But overall, we can say restrictions for individuals, for traveling and asset freeze for them. So this is like members of the Duma and the National Security Council, so-called Russian Oligarchs and their controlled interests, there are now further asset freezes. And when going to the next one to the economic part of it, then here, it's, as of today, mainly the restriction of export of dual-use goods, high-tech goods, semiconductors, computers, telecoms. We know about Nord Stream 2. We know about restrictions on exports to oil refinery material, aircraft, aviation equipment and tourism services. So these are -- the recent -- once the Russian air space, you are aware of it is closed, we see cultural and sporting restrictions. If we move to the next slide, then I think what's -- because of our business, we have the Central Bank, we have the sovereign limited, I mean, what's the biggest part was the asset freeze on the foreign exchange reserves and the band to raise sovereign debt. We have Russian banks where the primary and secondary market access for Europeans is restricted. We have the asset freezes. I think I do not have to read through it. You probably all are aware of it. I think what's currently very limiting for payment transactions is that individuals and legal entities are only allowed to have -- we can accept deposits only in the amount of EUR 100,000. So if I move to the last slide, we -- what we can say is that these transactions are permanently, permanently extended and sharpened. So it's really difficult to, yes, implement it every night. I think what we can say is that they're really far-reaching and maybe Hannes then would add a couple of things as well. So of course, 2 things, which are more operational, the one is some of you are interested how we are dealing with supervisors. You are aware that we are directly supervised by ECB. We have regular talks with the joint supervisory team, which have staff members from ECB and the national supervisors, of course, we have our permanent talks with our people. Looking at this uncertain situation, we today made a decision in the Board, and I think you have seen it maybe already as in our talk, that we say this dividend proposal, what we wanted to get approved in the shareholder meeting end of this month, we will change this proposal. What we say is during this time of uncertainty, we will propose that we immediately do not pay a dividend, but we keep it as a potential dividend and see how the development over the next couple of months will be. Hopefully, it comes down. Hopefully, dust settles. We then, of course, will understand what the impact on our CET1 ratio is and hopefully, we then in a much clearer environment can pay this dividend. But as of today, we will propose to the shareholder meeting to postpone this dividend and the procedure, how this works, you are well aware of it. And now we would be ready for your questions. Thank you for listening.

[Operator Instructions]. Our first question comes from Izabel Dobreva with Morgan Stanley.

I have a few questions, but let me try to condense them into just a few. So firstly, I wanted to ask you about how we should think about the bear case here. Could you talk us through how we should think about the hypothetical worst-case scenario and the absolute impact on capital? So I know you've disclosed the EUR 2.7 billion of equity. In your mind, is that the absolute amount that you could lose? And what is the interplay between the RWA and also the FX hedge of EUR 1.4 billion? How much of an offset does that give? And then, of course, on top of that, what are your expectations around the cross-border exposure that you have and how we should incorporate that into the impact? Then my second question is what are your expectations regarding access to the Central Bank? And here, the question is really twofold. So if we compare to 2014 playbook, would you expect to have access to any central bank support measures, should the need arise? So capital, liquidity support -- so would you have the same access as domestic banks? And then more broadly, how does the current situation compare to 2014, financially, in your mind?

Well, Izabel, if I shall start in last time, I have been asked by one of your fellow colleagues, what would be the worst-case scenario. And I was answering and saying, well, if people will face harm, and unfortunately, we had this, but I'm now focusing on the economic and financial consequences what you have asked for. And yes, I think the starting point, as we also have shared with our slides is -- and this is for me, what is very important, this is a stylized scenario because we have locally a very strong portfolio. And what we always have shared with you, with you as the financial community is that we are selecting very carefully. You can also now see it in our portfolio presentation that we have done a very careful selection and that we have a very strong portfolio. You also can see it with the risk cost we had shared with you over the time for this portfolio. So for me, it's important that we are not just focusing on the worst-case scenario, but I'm happy to talk you through. So yes, you're right, it's this EUR 2.4 billion of equity, what we have discussed, and you could also add the -- in the worst, worst, worst-case scenario, the EUR 600 million I was sharing with you on the cross-border exposure. But what is important is that we have this EUR 1.4 billion of hedge volume in place, where you would have currently a mark-to-market of some EUR 300 million, EUR 400 million of positive market but mark-to-market already on this hedge. So you could immediately deduct this one. And also, of course, the risk provisions what we have built to this. When talking about the worst case, do not forget at the same time, we also would, of course, lose the RWAs. And if you would go to our presentation, which we were sharing with the market on February 2 and you look at Page 51, you can see that we had some EUR 12 billion of RWAs. Well, so meaning that in this worst-case perception, as you were asking for, we have currently, by the end of the year, we have EUR 11.8 billion of common equity Tier 1 after deduction. In your worst-case question, you have to deduct this EUR 2.7 billion, you would add back some EUR 400 million plus the risk provisions what we have built, would lead you to somewhere around EUR 2.5 billion -- EUR 9.5 billion, EUR 9.6 billion. And at the same time, you would deduct from the EUR 89 billion of risk-weighted assets, you would deduct the EUR 12 billion, leading you to EUR 77 billion. And the calculus what this would then mean in terms of CET1, you can do on your own. So this I think would be for me the worst-case scenario. For me, this is a stylized scenario. But you have asked for and this would be our thinking, Johann?

Yes. Thank you. Let me add to some of your other questions and maybe still at where Hannes is. I would not even call it a scenario. I would say if you have to -- I don't know what in a reverse, reverse stress or whatever you do, what can happen. I think it's important to emphasize that the bank is very strong from the underlying business. And of course, with the new ruble rate, the -- and then probably also if the -- and one has to assume that the macro development will -- it might be a recession, then, of course, it will increase also the risk costs. And yes, the -- as I said before, you should not expect in these days a loan growth. So some of the elements, what might have been used in modeling a very bright future for the bank do not hold anymore. But as I said, the position is very good. And I think we are -- if this is the question, if I should understand it, this bank is a Russian bank under Russian regulations. And of course, I would -- I expect that the bank, like any other bank, has access to ruble liquidity, if required. But as Hannes showed before, it's very well funded and this is the starting point for all negative scenarios. I think it's -- also we are not the big bank. I think we are still in the top 10. So in normal terms, you would also argue that with around EUR 15 billion of deposits, then this is a reasonably serious bank and a very good bank. So here, I would expect that the bank is treated in a way like another Russian bank by the Central Bank.

Our next question is by Gabor Kemeny with Autonomous Research.

Can I just follow up on the worst-case numbers, Hannes just mentioned? Were you saying EUR 2.5 billion of potential losses in Russia and, on the other hand, EUR 12 billion of RWAs? Were these the numbers? Or would you like to suggest anything else?

No, Gabor. No, Gabor, that's not the case. So one has to say in a worst-case scenario, I think the bank in Russia still could make a profit. So this is my assumption. I don't know what -- how bad a recession has to be that this bank goes into the negative. We have not seen this over the years. So -- and I have mentioned the numbers. So there is no scenario where you say -- I mean you can always construct one. But given the macro scenarios one might use, you won't see it in the negative. So what Hannes was referring and sometimes people ask, might it be possible that you lose the bank. Then I say, I don't think so, I don't think so. But only then, if asked, what would then be the impact if you lose for whatever reason the bank. And you can do this calculation for any other country as well, then these were the numbers what Hannes was referring to. So there is no -- to make it clear, there is no idea, no era that the bank in Russia will make a loss of -- will make a loss at all. And Hannes might add to the potential risk cost.

Gabor, I have seen your research, where you were playing around with the 1989 era scenario. And I think -- and I have seen that you were playing around with a haircut of 60% to the asset side. But I believe what is a big, big, big difference is that at this time, also, there was a lot of cross-border financing and a lot of dollar financing. If you look at our numbers -- and this question will anyway come, so I take it now. If you look at our bank, and we have introduced the bank clearly to you and saying, well, we have EUR 11 billion of loan outstanding with our clients. You could say, well, we have an expected loss of somewhere around EUR 100 million, EUR 150 million. And as said, the portfolio is a very clean one, it's a very strong one with a very low probability of default and with very good corporates in terms of credit metrics. So usually, what you can see in this, I would now take the relation to 2014 is that you could see a multiple of the expected loss for those countries, which are in a war-like situation, what we unfortunately now face in Ukraine, between -- around 5x. And then, of course, you could add, as Johann said. And if you think about our thinking when thinking about Russia is that the multiple could go up to 3x versus the expected loss. What is the reason, why we would see this maybe a little bit longer and a little bit more pronounced over time because, of course, the sanction will need a certain period of time that they bite and eat into the corporate balance sheet and P&L. So this would be for me, given this current environment, my -- credit risk-wise, my worst case number.

Understood. And if we just come back to the scenario when you lose the RWAs. So under what conditions might it be possible? I mean, I guess this would be the walkaway scenario we are talking about. So is this something stipulated in your current resolution plan submitted to the regulator? Talk a little bit about this scenario.

Gabor, one can have any scenario built. I don't see that we have to walk away. So walk away means that we find reasons, and I have nothing in my thoughts, which would lead to a walk away. As I said, I do not expect retaliation from whoever in Russia. I think this is a well-respected bank, a Russian bank with, of course, Austrian, international shareholder. I have no indication, no assumption that this happen. And therefore, there is -- I don't think that there is -- we need to think about the walk-away scenario. But as Hannes said, if asked worst, worst, worst, and then this is probably not economic, but something else because, again, economically, it was shared. He says 3x the PD. And of course, the last year was a good one. So probably this is not the normal PD, but Hannes could also share the PD with you what we have in this portfolio. So here -- to make it clear. I think in these days, also with some news today that we intend to walk away or so. For me, it's very important that all of you understand we are not walking away.

That's very clear. And just one other question. The institutional protection scheme, your -- the Raiffeisen IPS. Can you help us understand under what conditions could you grow the funds from this IPS? I believe you mentioned around EUR 800 million accumulated. So EUR 800 million accumulated in the IPS. So when could Raiffeisen draw this funding?

Indeed, the fund is about to be EUR 800 million. I think what you asked now is the conditions we would have to drop with our capital, and it's on -- in our presentation. It's the Slide 35 where the big -- the big elements are developed and what we -- what would need to happen is that we drop -- that we drop to a level where one might say now they need a CET1 support, which is not necessarily a trigger. So there is some flexibility, but I -- as Hannes said, with the scenarios one might have, again, this is -- I haven't seen in our bank a scenario where we would need the IPS. But right, it's EUR 800 million, whereas around EUR 400 million are paid in by us. So this, of course, is the first source anyhow.

And just to confirm, would you be able to draw potentially the full EUR 800 million? And would this -- you mentioned a drop in the capital ratio, like would this be a drop to your CET1 SREP of 10.4%?

Look, it's always -- the specific situation, what one would have to look at. But of course, if there is the need, then this is the idea of the IPS, and it's always about -- capital is, of course, the, let's say, the bottleneck in a very difficult situation. So once again, it's paid in. It's to all the members available. I don't think that we will have a scenario where we need it. But yes, it's there.

Our next question comes from Máté Nemes with UBS.

I had a couple of questions. Firstly, can I ask you to perhaps discuss some of the indirect exposures to the Russia and Ukraine? So not direct exposures to the countries, but anything related to interbank or Eurozone or other operating country corporates, which might have an outsized exposure, sales or other exposure due to Russia, Ukraine, maybe also Belarus? That would be very helpful. Secondly, the Russian sovereign exposures. Are these effectively government bonds? And are these fair value through OCI or held to maturity? If you could clarify the accounting treatment of this. And lastly, can you comment on the committed credit lines? Have you seen a number of corporates in Russia or Ukraine drawing on these in the last couple of days or a couple of weeks? If you could discuss what's been happening on those fronts?

Well, on the first, Máté, on the first question, I'm not perfectly sure if I got your question right, but I give it a trial. The way I understand it is I was talking on this cross-border exposure, I was talking to financing. Is it trade finance? Or is it financing provided cross-border from Vienna to Russia? And now you're asking, well, -- but what is also the other exposure we could have with Russian entities across Europe. And if I'm looking here, and of course, you're right, there are some Russian entities, which have their trading hub here in Switzerland and Germany or elsewhere. So on the corporate side, we have real financing, some EUR 299 million. And if I think about the financial institutions when talking about loans, this is EUR 32 million. All numbers I was sharing with you is by the end of the year. If you have -- if you were thinking about this indirect Russian exposure, if not then, please, clarify later on. The second one is on the sovereign exposure. Yes, this is sovereign bond mainly. And as I was indicating, this is a typical banking book position. So you could say it's being used as a liquidity instrument for repos with the Central Bank and is currently held with hold-to-collect. And on the committed lines -- on the committed lines, Máté, just to add what you have asked here, of course, we have seen clients who were willing and to an extent, but these were not extreme demanding on the committed line on the Russian side. On the Ukrainian side, yes, of course, we have seen it, but it was not too pronounced.

Understood. That's helpful. Just going back on my first question. Thank you for the answer to those. I was wondering actually if you had credit exposures to corporates, large or midsized, perhaps based in some of the other operating countries, Slovakia, Hungary, any of the other countries, Czechia, perhaps, which have significant sales exposure due to Russia that might impact their cash flows or in any other way their credit quality?

I got it. I got it. Well, this is currently to see how the -- maybe to -- also to flex some numbers here, the total economic interaction last year and this year on the goods being delivered from Russia to the remaining world is some EUR 300 billion, but I don't have yet the statistic in front of myself, but we would have it somewhere to see also the economic interrelation between the different countries and Russia, and then we could look at how much our counterparts are being affected by this one. So I see now your question, but unfortunately, I cannot directly answer what is the interdependency between a Slovakian company and in Russia. If I think about on top of my head on the top corporates were each country, I would not have an immediate one in front of my head. But here, I would rather prefer if colleagues from the Investors Relation could follow up with this question and being precise.

We'll take our next question from Alan Webborn with Societe Generale.

Could you talk a little bit about your understanding of the sanctions that are being applied to some of the Russian banks in terms of exclusion from SWIFT, for example? And whether you -- they will get potentially collateral damage from that -- is it something that you find will help you do more business? Is it a big challenge to your systems? Could you just perhaps try and give us from the inside out a view of what you think the impact and in terms of how you will do business because of what's happening to other banks will be impacted? And I guess the same question, I mean, I noticed today, I think Visa and Mastercard have withdrawn from a lot of banks in Russia. How does that impact you in terms of your domestic business on a day-to-day basis? Because one feels that politicians are saying that taking a bank out of SWIFT effectively paralyzes it? I mean, from a banker's perspective, looking at other banks in the market, how do you see that? That would be interesting and helpful to know.

Yes, Alan, thank you. I think let me start with your general one, which runs through all business opportunities. This is not the time for business opportunities. I think in these days, everyone is rather focused on dealing with all these new regulation sanctions, which are permanently coming and trying to get the payments done. As I tried to explain in my introduction, where we currently feel the biggest pain is that, yes, to get an idea to deal with this regulation that you do not -- are not allowed to take deposits from Russian private individuals and legal entities, also banks on the one hand, but on the other hand, do all the transactions. I think for the system, it's always painful if one is excluded from the SWIFT, of course, I think within Russia, what I hear is that the local system works. So it's more the international. In the international, I have already explained the limitations. I understand that at least as of now, the SWIFT will be kept open at least for a couple of banks to keep the trade flow going. We'll see what this is. And yes, I think currently, the challenge rather comes from the other restrictions, what I explained and -- and it will -- I think it takes -- simply, it takes time to adjust. So of course, if the full country has -- will come off from the SWIFT, then probably challenging the payments -- channeling the payments might be as well difficult, but then it depends on the sanctions. But this is a risk for any trade, what the world would have then with Russia.

Máté, if I can come back still to the question for Máté because my -- the team is doing an awesome job here supporting us when sharing the EUR 600 million of cross-border business, the way how we do the assessment is that we include to this cross-border exposure, all those companies where the revenue stream is dependent with a percentage of more than 50%. So all those companies, which are exposed with a revenue stream, 50% plus towards Russia or the -- yes, towards Russia, they would be included in the EUR 600 million. So this is the question you raised, Máté.

Our next question comes from Hadia Guergouri with Allianz Global Investors.

I have a question about the AT1 fortune given what happens on dividend?

My recent information is, but I don't know if this will change that coupons are [ paid ] and so not only dividends, but this is not fully confirmed. So...

Okay. So the...

Wait, wait, wait. my team is correcting me. And the question is, are you talking about our AT1 or the Russian one?

No, the...

The RBI's?

Yes, yes, exactly.

RBI's AT1, now this we will pay. As of today, this is what I can say is we will pay, yes.

We'll take our next question from Mehmet Sevim with JPMorgan.

I have just a couple of questions, please. First of all, how is the way you look at your geographic footprint changed fundamentally in the last few weeks? I know you're not walking away, and we know Russia is a strong franchise, and you've been operating in the country for many, many years. But -- when the dust settles, hopefully, will you see a need to look at your geographic footprint and rethink, if necessary, after all, what's happened so far?

Yes. I think we -- I can state, and you have seen this in the many discussions that we regularly look at the geographic footprint and that we are ready to adjust. In this specific situation, of course, it really needs that the dust settles. And of course, we always have to understand, do we have -- do we have a reasonable role in a country where we are active in? I think what you can see so far I could say also, we are comparatively small bank to the large Russian ones. I think we still had a reasonable position, and we had good service to offer. And only when the dust settles, one can say, is this still the case or has it or will it change dramatically? But here, I think it's too early but it's not specific. Of course, of course, what we will see is -- we don't know because that the dust -- as you rightfully said, the dust is still there. And one does not know where the sanctions will lead to and what it would in the mid- to long term mean for a bank like ours. But I mean, the starting point in this difficult time is a good one, I would say. So we'll see, but it's too early to say, yes.

Yes, absolutely. That's very helpful. And maybe related to this, do you think the role that you're playing in Russia as a Western financial institution can change? I understand the position of RBI, but essentially would you play a different role in a year's time or so, as a Western financial institution in Russia? And what role could that be?

If you look at the numbers, what we have, then we can say, it's primarily a bank that services a huge number of private individuals. We are moving into the corporate midsized business, and we have with large corps a relatively small exposure, which is not a surprise for you as we are small compared to the size of these companies. So I think it's very difficult to say in this environment, what the role of a foreign bank in the future can be. But basically, as I say, this is -- I don't think that -- and Hannes have mentioned it. So if we talk about the currently sanctioned exposure, so this is not our business, what we are in. So this is important to say. And when we talk about private banking, one should not think about the deep pockets. These are usually in the big centers. So these are wealthy individuals, which want to have also another relationship outside so -- with a bank with some Western style whatsoever. So the big portion of the bank is a local one, and it's -- frankly, I don't know if the country will change significantly and over which period of time.

Okay. That's also very helpful. And one final question, if I may. Have you had any conversations with the local regulator, the Austrian regulator in the last week or so? And if so, is there anything to flag from those conversations?

We had many. And of course, they get an update. We use the same numbers than (sic) [that] we present to you. We have -- I would say there, it's a different audience, but it's not so much different what we talk here and what we there. It's about an update on the situation as we do it today.

We'll take our next question from Lee Street with Citigroup London.

I have 3, please. As it relates to your RUB 1.4 billion hedge, just given the restrictions on trading rubles and depending on who your counterparty is, can you just give us comfort that you'll actually have to crystallize the gain on that hedge? Secondly, you're very clear that you're not walking away from Russia. But if you were to take losses or capital quality change, would you actually be willing to inject fresh capital into the Russian -- into [ OFAC ] given those restrictions on getting capital out at the moment? And then finally, the EUR 600 million Russia exposure in the head office you referred to, can you just confirm that's directly comparable to the EUR 1.6 billion that you disclosed on February 2 and there's no other exposures within the sort of GCM markets in that business? That would be my 3 questions.

Well, Lee, thanks for the question and giving us the possibility to be even more clear. So the hedging is being done with international well-recognized counterparts and it's on an NDF basis. So these are very, very professional ones. We have daily margining. So I would not see any reasons for not crystallizing the profiting. Can I have again question, colleagues, number three? So -- and the other one would be the EUR 600 million versus the EUR 1.6 billion. Yes, I -- listening to you also to the many questions which came in then maybe we misguided you with this EUR 1.6 billion because, there you would have also a lot of committed lines included, which, of course, we would maybe not allow in these circumstances to be included. You have some other positions. So the EUR 1.6 billion was the exposure default prices here meaning for any credit conversion, but you have to include also, of course, what do we have as a collateral, what is the cash component? And for me, the economic exposure is the EUR 600 million. And I gave you the details how this EUR 600 million are being composed.

Okay. So that EUR 600 million is a net number? Is that fair to say? Not the gross?

This has been a net number because we would then deduct collateral in cash, yes, indeed.

Could we get the gross also please?

Colleagues are looking at it. The gross, gross, gross, as I said, would be this EUR 1.6 billion. But that's the reason why we have now shared the EUR 600 million with you. And please bear also in mind and what is important for me, Lee, when you're looking at the numbers and I gave you the details is also what is then being really allocated to Russia because we're taking also the Russian companies, which may act not in Russia. But so the real direct exposure is, as I said, the EUR 260 million, if we talk about loans and if we talk about contingencies on the corporate of EUR 48 million. And as I said, if you have a repo transaction, for instance, which is nicely collateralized, this was included in this EUR 1.6 billion.

Okay. And then finally, on the willingness to inject fresh capital into Russia, if that was to become an eventuality?

Yes. Look, Hannes, and I have tried to explain that we don't have any scenario where this should occur when think about what they are earning and how the development is and what the worst case of risk cost is. So talking about something which is out of any scenario, I don't know how I would discuss.

We'll take our next question from Riccardo Rovere with Mediobanca.

The first one is probably for Hannes, and is -- and I get back to what I asked while -- when you release the numbers, I was a bit cut off when you were explaining what in your view is the worst-case scenario. So I would kindly ask you to go again through all the numbers and calculations that you made, let's say, 30 minutes ago right at the beginning of the Q&A session of this call. The second question I have is, we maybe eventually can understand a little bit the impact of sanctions on corporations -- on the Russian corporations. It's a bit more complicated to understand the impact on sanctions imposed to the Russian Central Bank. Would you be in the position to explain how, if that has any impact on new or in general, on banks having dealing with the Russian Central Bank? And your opinion here that would be really appreciated. And anything you could -- any color you could share with us?

Riccardo, thank you for the question. My way of thinking when thinking about this worst case and I was using the multiples of expected loss. And I will do it very slowly because this is very important to me. And if I would start with the Page 3 of our presentation, which we have shared today with you, you can see that we have provided loans to customer in the total amount of EUR 11.6 billion. Over the last years, you have seen that we have risk costs somewhere around EUR 100 million. For the sake of easiness, let me make it an expected loss of EUR 150 million, okay? And what we have seen is -- or what we believe, given our very strong portfolio and the very low exposure towards the directly sanctioned counterparts is that we could see a multiple of this expected loss of 3x. So this would be, for me, in Russia, the worst-case scenario. And just to do the math and finish the math, what Johann was indicating, you know that we have a country and in Russian business model, which can earn EUR 400 million, EUR 500 million. That's the reason why we are confident and why we are sharing our thinking here on this -- that this scenario has to be so harsh that you would bite into the P&L. The second one, if we would now move on and thinking about Ukraine. And I know that this is the call with the financial community. But please bear in mind also the big issues, the emotional issues, what they have currently locally. But also here, we can do the same story. We have a portfolio of EUR 2.2 billion. We have currently somewhere an expected loss of EUR 22 million to EUR 30 million. And what we have seen out of 2014 is that -- but 2014, as I said, is maybe a bad guidance because there, we had still a lot of foreign currency loans. But what we can see is that you then have to use a multiple of 5 to 7 towards this expected loss if you come into the same situation as we see it now in Ukraine. So this would lead us somewhere to around EUR 150 million to EUR 210 million on the risk cost side. This is what is currently our thinking. And as we also were sharing, and this is important is that we had this capital hedge in place, which I have explained just previously, this EUR 1.4 billion. We also have allocated, Riccardo, and you are closely following our organization. We have added these risk provisions already in the 2021 numbers. So there are some mitigation things also in place. So this would be my talking you through this worst-case scenario. And of course, you can always employ even more demanding stylized scenarios, but this would be the best what we can share with you at this period of time. Johann?

Yes. When talking about sanctions on CBR, I think the impact is mainly what you see on the market. So we, as RBI or other entities, of course, we never were in the league to deal directly with CBR. And I think the impact, what you see is the impact on the market. So intervention or not intervention. We have seen the ruble rate. We have seen the measures they have taken. So I think I cannot add so much on this, because within Russia, it's -- I mean like in any other country, the central bank adjusts itself, and this is happening. What I sense is that the FX trading is not as liquid as it has been in the past. And, yes, the -- probably the liquidity is rather provided by -- but this is -- more my assumption is rather provided from the exports, which are coming in still strongly, and this is the source for it. And of course, the measures what the Russian have taken on foreign investors. This, of course, in these days, limits the demand for foreign currency in Russia.

Just to get back, if I may, 1 second to Hannes. What you have just described to me is RBI continuing to operate in Russia. I perfectly understand you don't see any -- you don't see the scenario in which RBI walks away from Russia. But if that had to happen, just for the sake of imagining it, the maximum, what would happen is you lose all the equity, the EUR 2.4 billion in equity plus AT1s and so on, but you would also give away all the risk-weighted assets, all the liabilities, too. So do I understand it correctly that your risk-weighted assets could fall by roughly EUR 12 billion or so. Is that correct to say?

So Riccardo, let's make it simple. So if we walk away, then like always, when you walk away, you leave a bank behind because this is what we say when we walk away. So then the question is, will we get anything for a very good bank, which we'll leave behind? Is it that you assume you get EUR 1? Is it assumed that you get much more and then you deduct whatever you assume what one would get from the EUR 2.4 billion? Because usually, if you talk to someone who is interested in your bank, then you talk, of course, about the equity, the AT1 and all these things. So yes, whatever you have between EUR 1 and EUR 2.4 billion, the difference is the loss.

Right. Okay. And the EUR 1.4 billion hedging, would it have any impact on all of that?

The hedge -- no, no, the hedge is -- as Hannes explained, the hedge is in the head office because, of course, there is no need for the Russian colleagues to hedge their own equity, it's here, and independent of what happens to the bank, the transactions are there. And of course, there might be a time when we don't need the hedges anymore. But this is -- I do not get to -- do not want to get 2 planes. So yes, the hedges are here in Vienna.

But they're just solid in [ sales ].

And as Hannes said, with international counterparts.

Right. So the impact for RBI in Vienna on the capital would be, let's assume you walk away for zero, okay? Just for the sake of putting some, maybe stupid with some numbers. You lose the EUR 2.4 billion, but you have a hedging in place. The hedging would, let's say -- I'm not going to say balance, but an offset, the smoothen the impact. Do I get it right, in Vienna?

Yes. You are right. The hedge as it stands, not anymore needed as a hedge, you dissolve it and wherever the ruble-euro then is or dollar is, this is then a smoothen out. Yes, indeed.

Right. Okay. So the gain that I imagine as one of my previous colleagues mentioned, the gain you probably are carrying on this hedge, it would smoothen the impact on the EUR 2.4 billion on the equity side.

Yes.

Sorry. Sorry about that.

Don't Worry. Transparency and being clear is a high value.

We'll now take our next question from Andrea Vercellone with BNP Exane.

Two questions. The first one is on the cross-border exposure. And can I ask you to put back up the slide again because I couldn't take it down and we actually don't have it. It's not in PDF. It's just on the web. But my specific question is, is the difference between EUR 1.6 billion that you gave us earlier in the month and the EUR 600 million you're talking about, all collateral? If it is all collateral, is the collateral sitting outside of Russia? And the second question is on the increase in interest rates in Russia to 20%. And of course, there will be some impact on provisions due to affordability, not the main driver probably. But are there any implications, positive or negative, for your revenues, whether it's NII or trading losses, if you can comment on that as well?

Andrea, I will take the first question on the EUR 1.6 billion. And yes, indeed, you are right, there was a rather big repo transaction done with Western counterparts. So with counterparts being domiciled in -- not in Russia, but of course, having maybe some shareholders in Russia. And the collateral, which we accept is also having no Russian collateral. So this is one of the biggest differences between the EUR 1.6 billion I was sharing with you and the EUR 600 million.

But if you ask about the collateral, the collateral is not sitting in Russia, so you can get your hands on it?

Not at all. The collateral would sit with an international custodian. It would not be in Russia. So it cannot walk away, the collateral.

When addressing your other question, what is the impact from this rate hike. So one might say, overall, on the -- as you rightfully said, it might be, of course, for some customers, painful. I mean here, we have to be aware that different to other countries, private individuals have fixed rate loans. So for them, at least till the maturity, they are where they are, and it does not add to their pain. So this is -- I mean, in the corporate, usually, they are probably, one might say, depending on what they are doing. So for those exporters, yes, however, painful the FX rate is overall. I mean, for some, it might a little bit reduce the shock. So in terms of balance sheet structure, so therefore, one might say not so much. In terms of bonds. As Hannes said before, around 80% is held to collection. So here that's not a valuation impact now. And if you talk about others, then it's about EUR 10 million, EUR 15 million loss what you would expect from this position.

We'll take our next question from Jackie Ineke with Morgan Stanley.

I have 2 questions. The first one is again on your AT1s that are outstanding. Of course, you stated you're not paying an equity dividend, and that's your decision. But do you envisage any scenario where you might decide not to pay an AT1 coupon and by, this would be a management discretion or in fact, the supervisor requesting that the AT1 coupon is not paid? And then I have a second question to follow-up.

Yes. I think it's clear. It's the management discretion, but I don't have any scenario. And I have many on the table, as Hannes described, where we currently have it in the plan not to pay the coupon.

You have no scenarios on the table where you don't pay a coupon. Sorry, sir, was that what you just said?

Right. That's what I said.

Okay. And just as a follow-up on the AT1. You have an AT1 that's callable first call date in December of this year. Do you have any thoughts on the likelihood of call of that AT1?

No, here, we -- I mean, it's the old tradition that we only talk about it when we are -- when we have made that decision. So sorry for that.

Understood. No problem. The second question, it was really coming back to the kind of long-term strategy in Russia. So I appreciate that recent events, of course, were not anticipated when most recently contemplating the bank strategy. But purely from an ESG perspective and investors focus on that, what are your thoughts about maintaining a presence in Russia longer term? I appreciate it's a good, clean, profitable bank, but just purely from the ESG angle here?

Yes. Look, I think that the way we presented the bank, but thank you for the question -- this gives me another opportunity -- follows our strict rules within the group, so the customers, which we serve is fully compliant with our S and G requirements. So the E, of course, is something what we will develop over time as, of course, the energy is an important part in the country. And -- and we will -- or we are in the process of adjusting it. So this might change our portfolio. I mean, as I said, if we find -- if we are challenged in some areas, what I can see then, then we would have to adjust the base. And I think, please forgive me that at this point in time, it's -- I can't look forward what the future situation will be. But I mean, currently, we serve 4 million customers so -- which are Russian customers.

Okay. So it's something that you'll revisit again as things go? Yes, I guess...

Like always. So this is what I want to confirm. We run through all the countries, and we see the developments in all the countries. And if the situation is difficult in the country for maybe all the reasons what you have in mind, then we restrict our business there. We avoid areas, which would be in conflict with this. It's -- of course, now there is this big political thing. But if you look at -- and this way -- and this has to be evaluated, what consequences this will have, of course. But here, please be patient this will come at every now and then, of course, as we do. But if I look at the portfolio, as we had it before this problem started, I can say this is a clean portfolio, and we applied all the requirements what we have throughout the group and which are applicable in all the countries, everywhere. So here, I would say the starting point is a clean one. And if now for whatever reason there are substantial changes, then we will adjust. And we will adhere to our principles.

Okay. Understood. So I guess if investors decide for themselves about investing in RBI considering the circumstances, then you would listen to that. And potentially take action if you felt you needed to?

Thank you for sharing your thoughts on it. No, I don't think that you expect that I comment on that. We are aware of what's going on around the world and what people are thinking. One statement should be allowed. We are not an investor who goes in and out in a listed company with a very liquid stock. So whatever expectations one have, this should be always considered. But we have strict ESG principles.

Our next question comes from Diogo Silva with PSquared.

I think a lot of them have already been covered by other people. But one thing I wanted to ask you, and I think you said you were going to look at it was on the EUR 1.6 billion, could you please break it down between -- my understanding is that there are 3 components there. There are the gross loans that you've given, there are the loans that are -- lines that are drawn and then there are the repos. Would you be able to break it down the EUR 1.6 billion between what's repo, what's uncommitted loans and what are drawn loans?

Well, let's see if in this swift manner, we -- I can serve what you are asking for. So the EUR 1.6 billion were including some EUR 700 million, EUR 800 million of repos, okay? So I have to work on now with the EUR 800 million. And what I was sharing with you is that the loans to customers would be some EUR 500 million. And then I was splitting up this EUR 500 million in country, which is EUR 216 million and which is to counterparts, which are linked to Russia, but having not the residence of risk to Russia, which is EUR 299 million. So EUR 800 million in total, EUR 500 million then on the corporate side. And I was splitting up the EUR 500 million for you, how much is in the country and how much is out of the country. Then we have the contingencies. We have contingencies of EUR 240 million on the corporate side. So this is very, very low cross-border, which would be EUR 48 million, and the remaining part would be towards counterparts, which are related to Russia, but the transaction does not go directly to Russia. So this is EUR 193 million. All these numbers, please bear in mind, are numbers by the end of the year. And of course, we do continuous transactions or we have done continuous transactions with them, meaning it's trade finances, is it any other thing. Now you could think, well, the risk officer is not capable to do the calculus because now we have EUR 500 million plus the EUR 240 million. And we would need to explain also the 60s I was mentioning to you and here numbers to, of course, fit because, as I was sharing with you on the financial institution side, by the end of the year, it was EUR 34 million to Russian institutions from Vienna to Russia and to counterparts, which are not being located in Russia, but related to Russia, EUR 32 million. So this is very detailed how our total cross-border exposure is looking like. Hopefully, this helps. There are no further details, sir.

Makes a lot of sense, and I got it. And I'm assuming this includes -- so for example, if you have exposure to one of the Russian banks' operations in Europe, but the European operation, that would be included in the agenda? Correct?

Yes, indeed, this would be included in these numbers.

Perfect. And then my other question is related to the amounts that you've mentioned in loans to sanctioned entities. Am I correct in assuming that those amounts are all included in these corporates that you've -- I mean, are actually those amounts in the corporate are those amounts in Russia -- in the Russian exposure of the Russian bank?

These are the exposures in total when looking at -- I'm referring to Page 3 of our presentation. So this 1% is referring to this EUR 22.9 billion. And as you know, there have been FIs being sanctioned in corporate and our exposure totally to the FIs is anyway, very limited. This is how this 1% of sanctionized exposure would be calculated.

Understood. And then the last question I wanted to ask you is in regards to your exposures to Belarus and to Ukraine, do you have a similar offset in the shape of a currency hedge?

Only very limited because, as you know, the exposure, the currency pairs on [ Kiefner and Pure ] are not so liquid. That was also one of the consideration where we have used the over more extensively.

Perfect. Actually, sorry, sorry. I have actually one more. My last question is just in terms of other all the exposures that you have to Russian government bonds, Russian corporate bonds or Russian equity, so any capital markets exposure? Is that all included inside of the Russian bank? Or is there any element of this at the corporate as well?

I have to tell you, I think what our colleagues are now writing to me is that there is only very minor exposure out of Vienna to the distinction of the maturity part of the exposure I was sharing with you comes from our local entity. But as I said, if you look at the relation, 1% of the total exposure after this huge sanction bill, which was issued over the last couple of days, is also demonstrating how selectively we have been in our portfolio composition.

Sorry, could you just answer the question in terms of the corporate -- of the capital markets exposure? Is all your exposure to corporate bonds, government bonds and equities of Russian companies, is that all in the Russian entity? Or do you have some capital markets exposure as well in the corporate?

It's -- as I said, it is very minor out of Vienna and everything else is locally. And it could come from capital markets, but it could also come from classical banking business, meaning loan business.

We'll take our next question from Bill Holmes with ANZ Bank.

Noting that your Russian subsidiary is one of your larger banks. And on RBI's parent-only statements, your investments in subsidiaries are larger than your capital base, so you have double leverage, what would be the effect on RBI on an unconsolidated basis in a suspended or significantly reduced dividend situation from your Russian subsidiary?

I mean this -- what do you say is what is the impact now in -- with the dividend spend? Or what would be necessary in a negative development in the country that the Russian Bank is going a loss? So I'm not sure if I...

So if I look at your parent-only -- if I look at your parent-only financial statements, the income that you get from your dividends, well, your investments in subsidiaries on the assets at the parent-only are greater than your equity, so you have double leverage. So in effect, part of what pays your debt is the income stream from dividends. If the income from dividends from your Russian Bank were to be cut or suspended, what effect would that have on the parent-only's ability to pay its dividends -- or to pay its interest?

Of course, we still can pay dividends without the Russian -- sorry, we can pay the interest without the Russian dividends. I mean there is a significant business here as well, of course, yes.

Okay. It's just -- yes, it's just that the fact when you've got -- so there is a double leverage effect, and this is your largest subsidiary. Okay. That was my question.

We'll take our next question from Kian Abouhossein with JPMorgan.

I just wanted to follow up on Mehmet's question. Your decision to suspend the dividend for now and potentially pay later. Can you just run through the process of that decision? Has that decision been influenced via local or ECB regulator? And in what context has this decision been made? Is the thinking about a buffer requirement for you to pay that? We clearly know your minimum Tier 1 target, we know your MDA. Can you just put this a little bit more in context of your capital positioning as well as the process of the decision?

Yes. So thank you. So first, there was no influence from ECB on that decision. Second, there is no concern the buffer requirement or whatsoever. Third, what we said is, in these days, we have scenarios, of course, and there could be that we dropped at this point in time below the 13%. And at this point in time, being -- so as the situation is unclear and not wanting to drop below the 13% without having used the potential dividend. So that's the idea. So we assume that throughout the next couple of months, I hope, the situation gets clear again. That's what we hope because this would mean then, hopefully, ending the fighting and then the end, and the decision-making then would be that you are aware, it needs the shareholder meeting to decide on it. And anyhow, it's just a proposal what we're now making to the shareholder meeting on March 31. If this is accepted as we propose and if everything goes fine, as we hope, then -- and assuming that we have a good idea where we are, than in Q3, then we could call an extraordinary shareholder meeting with just this one agenda point where we explain why we then believe that CET1 ratio is fine, and then we could pay out this 1.15% or if we need to adjust it, then we could also adjust it.

And you're clearly thinking 13% as a hard number rather than MDA plus the buffer, which a lot of people talk about EUR 250 million, which gets you roughly to 13% anyways. May I just ask what is -- how you're thinking long-term about this number?

Look, it's not a hard number, but it's a very strong guidance. And so a hard number would mean that by all means, we would not accept a drop in one quarter below the 13%. So that's not the case. So if for whatever reason we drop 1 or maybe 2 consecutive quarters below this 13%, that would be acceptable. But this is not something what we would need, what we want to have over a longer period of time.

We'll take our next question from Tobias Lukesch with Kepler Cheuvreux.

Yes. I would like to come back to the ForEx hedge again, please. Could you give a bit more detail maybe on what the variation margins are? Are these daily? And also on the CCP, basically, you're using -- I think you already mentioned that it's kind of international and safe. But maybe you just could name where this collateral is basically posted? Secondly, you mentioned on the alternatives to SWIFT basically. Could you maybe again touch a bit on the business setup that is now -- well, RBI Russia is now faced with? And I'm still struggling a bit to really understand what it means for intergroup business at the end of the day. And lastly, is there also a possibility to be working with SIPs banks in a way? So how do we have to look at this maybe from a kind of a Russian perspective? And lastly, on Ukraine, I mean, less looking at Russia and Belarus, but looking at the Ukraine and with people crossing borders basically, I think there's very low visibility with regards to the loans, the assets you have there, what potential loss ratios are. So potentially everything is possible, as you mentioned in scenarios. I was just wondering, I mean, if it wouldn't be very prudent to take very, very high loss assumptions here, I think we know from history that in war times, banks were close to being closed down basically. So I was just wondering if it's not a reason for you to say we have to implement a huge general provision for the Ukrainian business.

Well, Tobias, if I may start with the question one, and then I will follow up with the question 3. So yes, these are international investment banks where we have a credit support annex and we do have a daily margining and the margin calls are with us. So this is the short story, what you would expect from a professional international bank participating on an [ Easter ] basis with CSA. The third question regarding Ukraine. Yes, you're right or you might be right, I don't know. This is a hedonic move what we have seen and nobody has thought about in the beginning of February. What we have done is we looked there in the history and looking what is a reasonable multiple when talking about multiples towards the expected loss. And I was sharing here my way of thinking with you that, of course, depending on the collateral damage, depending on the length of the war, depending of what are the next steps. So you see that I have a lot of conditions. And of course, those regions which are now heavily impacted and where you would see a high damage indeed, you could see a higher multiple than I was sharing with you. But please bear also in mind that we have the Western border of Ukraine. And so I think the best what we can do at this period of time is to deploy this multiple of 5 to 7x. And if it's then 8 or 9x, I don't know. But this is where our current way of thinking would go with this 5 to 7x as a multiple from the risk costs. And this is not yet the Q1 call. But of course, rest assured that, as you know, RBI Group, we always have thought and opened up our mind in sharing [ damage ] with the market and with the community how we come to certain provisions. But we also need to see how things do evolve and not making any stupid decisions. So this would be my way of thinking. I was sharing this 5 to 7x this year. We have to see a big reach in which collateral, what is the length of the situation and which part of the portfolio then is more impacted the retail in what the corporate in. But as I said, my way of thinking currently would be a multiple of 5 to 7x on the expected loss.

And if I have to take your question on what is the impact on SWIFT's abstention of Russian banks. I think for an outsider, it's really difficult. But when talking with experts, then one can say that's really -- it's really difficult and one has also to look at the wording of the restrictions, what other options are possible. But the Russian banks in Russia -- and I think this is our -- this is what we have to keep in mind. Russia has built a system, which, to my knowledge, is working. So within Russia, there is something available and internationally, it's more difficult. But Hannes can add more flavor to that.

Well, Tobias, I would again come back on the Ukrainian story again. There's one more additional thought, which is important there. We can currently experience that there is a huge support from the international community towards Ukraine. And of course, you also could think and potentially assume that if this ugly situation stops, that there would also be a still big support by the IMF, by the Europeans and by many other institutions. So if this support is then also being delivered, loss rates may come in even smaller. I think this is one important thought when thinking about the current situation. And as I said, ranges are broad. And of course, you are right. But at the same time, we see currently a huge willingness internationally to support also Ukraine.

We'll take our final question from Hugo Cruz with KBW.

Two questions. When you talk about the EUR 1.4 billion hedge, that EUR 1.4 billion, what does that mean exactly? Is that the value of the capital when it was hedged in Q4? Is it the value today, what you will receive today from your counterparty, if you were to close the hedge? That, for me, is very important if you could clarify that. And then less important. What's the amount of equity that you have in your Belarus business? Like you gave the numbers for Russia and Ukraine, if you could give that for Belarus as well.

Well, the EUR 1.4 billion of hedge volume in notional, those who are following closely to us know that we always had a certain hedging volume in place and rolling over. We have increased this hedging volume substantially already in Q4 and even more so when it comes to the first days in January. So if you would like to look up the growth rate, what we -- what is the stepping in growth rate, it's well below what you can see as of today. So the average would be somewhere around between Q3, Q4 growth rates and what we have seen in the first couple of weeks when it comes to in January. Then this EUR 1.4 billion have been established. So equity in Belarus is EUR 383 million. And we have some minorities locally.

How much is the minority as a percentage?

12%.

12%. Okay. I'm sorry, I still -- I'm a bit slow. With the hedge, the EUR 1.4 billion, okay, so that's a notional. So arguably, you got into that contract in January. So reality, I should look at how much euro move against the ruble and apply that move on EUR 1.4 billion notional that would be roughly the amount of cash you received from your counterparties. Is that how I should think about it?

Well, that's the way you would normally use it. But since it's being done on a forward basis, you could also include the interest rate moves. So you would take not the spot price only, you will also take the forward price and include it because you have the FX component and the interest rate comment (sic) [component], and it's done on an FX forward basis.

Dear colleagues, it was a very big interest today. Thank you for the many questions what you have and your interest in the bank. And I assume we hear you soon in another call. Till then, I wish you all the best. Stay healthy. Have a good evening. Thank you.

Goodbye.

We will now conclude today's conference call. Thank you for your participation, and you may now disconnect.