EU companies affected by sanctions imposed on Russia can get up to 400,000 euros ($440,360) in state support and compensation up to 30% of energy costs under looser EU state aid rules, the European Commission said on Wednesday, Reuters reported. From airlines to carmakers to tourism businesses, thousands of companies across the 27-country bloc have reported severe disruption due to the sanctions. Companies in the agriculture, fisheries, aquaculture sectors can get up to 35,000 euros while businesses facing a liquidity crunch can get state guarantees on loans, subsidised loans.
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Ukraine
From the pandemic to Europe’s largest military conflict since World War II, it seems the world is moving from one extraordinary period to another. The conflict in Europe has generated a maze of rapid legal, political and economic responses from authorities around the globe. Those actions are rippling through capital, markets and boardrooms as businesses grapple with how to respond. Join ABI and a panel of experts to discuss where we are headed and what businesses should consider.
Russians are starting to feel the economic pinch after Western countries imposed an unprecedented set of sanctions over Moscow’s invasion of Ukraine, Al Jazeera reported. Following weeks of mounting tensions, Russian President Vladimir Putin ordered a land, sea and air invasion on February 24, triggering a wave of financial restrictions that have plunged the value of the rouble, skyrocketed inflation and left many jobless.
Italy's biggest bank Intesa Sanpaolo will detail the impact of the Ukraine conflict on its 2022 earnings when it reports first-quarter results in May, its CEO told a financial conference, according to a person who attended the event, Reuters reported. Addressing the Morgan Stanley European Financials conference on Thursday, CEO Carlo Messina confirmed the bank's financial targets but said details on the net income impact for this year would be provided when Intesa next reports earnings.
Intesa Sanpaolo said on Wednesday that its loans to Russian and Ukrainian clients amounted to 5.1 billion euros net of guarantees from credit export agencies, which is around 1% of the total for Italy's biggest bank, Reuters reported. Intesa added in a statement it was analyzing its exposure to Russia and Ukraine to understand how to better handle risks in light of the European Union's decision to phase out Russian fossil fuels by 2027. Of the overall loan figure, some 4 billion euros are cross-border, with oil and gas firms accounting for half of the total.
BMW and Volkswagen warned this week that Russia’s invasion of Ukraine is causing shortages of some vital components, forcing them to reduce vehicle production in Europe, the Associated Press reported. The two German carmakers said the war is having a “negative” effect on auto supply chains, which have already been battered by shortages of semiconductors. BMW said Wednesday that bottlenecks at its suppliers in Ukraine have forced the automaker to adjust or interrupt production at a number of factories, which is likely to have a negative impact on vehicle sales figures.
The Ukrainian president’s economic adviser on Saturday played down the risks of the hryvnia devaluating further, despite the Russian invasion of the country that began on Feb. 24, Reuters reported. Oleg Ustenko told local media that Ukraine’s budget was fully funded and that the country's foreign exchange reserves of $27.5 billion would be replenished. Ukraine has secured emergency financing from the International Monetary Fund and other institutions to support its economy during the war.
Ukraine's top government economic adviser Oleg Ustenko said on Thursday that invading Russian forces have so far destroyed at least $100 billion worth of infrastructure, buildings and other physical assets, Reuters reported. Ustenko, chief economic adviser to Ukrainian President Volodymyr Zelenskiy, told an online event hosted by the Peterson Institute for International Economics that the war has caused 50% of Ukrainian businesses to shut down completely, while the other half are operating at well below their capacity.
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Cryptocurrency evangelists are on the defensive amid warnings from U.S. and European lawmakers that digital asset companies are not up to the task of complying with Western sanctions imposed on Russia following the country’s invasion of Ukraine, Reuters reported. The criticism has seen the crypto industry scrambling to regain control of the narrative, with many executives frustrated that the compliance regimes in place at leading exchanges, such as Coinbase and Binance, are being called into question.
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European companies are suffering yet more strain on supply chains already snarled up by the coronavirus pandemic as the conflict in Ukraine leads to growing shortages of key components, they warned on Wednesday, Reuters reported. The new snags pose a further threat to economic recovery in Europe, potentially prolonging existing bottlenecks that in some sectors were not expected to clear until next year. The conflict has added to the trade chaos that followed the global economy's emergence from pandemic lockdowns.
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