Bthe bank terminates loans to companies in accordance with the sanctions

OTP does not finance its Russian unit

Considers all scenarios, including a possible exit from Russia

Austrian bank Raiffeisen is also studying a possible withdrawal

Adds details, more comments, market reaction

BUDAPEST, March 18 (Reuters) – The Hungarian bank OTP OTPB.BU is ending lending to businesses in Russia in accordance with international sanctions and is considering a possible withdrawal from the Russian market, it said in a statement.

OTP’s Russian and Ukrainian businesses accounted for 15.8% of the bank’s consolidated net profit last year, OTP said this month, adding that it remains committed to the two markets for the long term.

Raiffeisen Bank International in Austria RBIV.VIone of the European banks most exposed to Russia, indicated Thursday that it was studying a possible withdrawal.

OTP shares were down 3.1% at 12,410 forints ($36.71) on the Budapest Stock Exchange at 10:10 GMT, underperforming a blue chip .BUX index down 2%.

“We are constantly reviewing whether further changes are needed regarding OTP Group’s presence in Russia,” he said in a statement posted on his website.

“We are considering all possible scenarios. Among these, we are analyzing the conditions and consequences of a possible withdrawal.”

VSOTP, Central Europe’s largest independent lender, added that it does not invest in Russian government securities and has suspended trading in such securities in all of its international operations.

The bank does not provide funding to its Russian unit, OTP said, adding that it maintains operations in Ukraine while providing humanitarian aid to refugees.

Earlier this month, OTP CEO Sandor Csanyi said the full write-off of the two units, which accounted for 6.5% of total assets at the end of last year, would reduce the Common Equity Tier 1 ratio. (CET1) of OTP by around 140 basis points to 15.4%.

“Peace can be negotiated between Russia and Ukraine, however, a lifting of sanctions against Russia cannot be expected in the short term,” Erste Investment economists said in a note on OTP and the Hungarian drugmaker Richter.

“In short, ‘no matter what’ (almost), Russian operations won’t recover any time soon.”

($1 = 338.02 forints)

(Reporting by Gergely Szakacs and Anita Komuves; editing by Hugh Lawson and Jason Neely)

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