Some of the world’s top lenders have been left holding potentially valuable Russian stocks after FTSE Russell and MSCI booted Russian firms off their indexes, forcing banks to shift clients’ holdings onto their own books.
JPMorgan Chase, Goldman Sachs, HSBC, BNP Paribas are among the banks that have been forced to absorb Russian stocks and related derivative positions that they had taken to support clients’ bets on indexes, onto their own books, sources told Reuters.
The banks could now be in line to cash out those positions for hefty profits when conditions permit, sources said.
Billions of dollars tracked MSCI and FTSE Russell indexes that included Russian stocks before Moscow’s invasion of Ukraine, and banks have now been forced to take on the Russian stocks that have been booted off the indexes.
Russian shares and derivatives have now been placed in separate trading books, and it is up to each bank to decide what to do with them, five sources said.
One source said it was essentially “free money” for banks when they can shift on the stocks.
It comes after US-based indices and investment firm MSCI pulled Russian securities from its emerging market indices in March after warning that the equity market is “uninvestable”.
FTSE Russell decided to remove Russia-focused companies when some brokers refused to trade their shares.