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. Last Updated: 07/27/2016

Barclays Reassesses Its Russian Business

Barclays PLC reported Wednesday that it was reviewing the accounts of Russian corporate entities and had asked some clients to transfer their business to other banking institutions.

A spokesman for Barclays said in a telephone interview from London that such reviews were common in the banking business and that the move was in part a response to new standards set up by the Group of Seven leading industrial nations that require banks to exercise more diligence in their relationships with clients.

But the bank denied news reports that the bank was closing all corporate accounts with Russian customers. It says it is also still involved in trade finance and foreign exchange services to Russian companies.

The account review was initiated in June, the spokesman said.

Last summer, Barclays lost more than pounds 200 million ($324 million) in Russia's financial crash and on a loan to Long-Term Capital Management, the U.S. hedge fund that collapsed and had to be bailed out in September.

In April, Barclays closed down its representative office in Moscow, which it had operated for 25 years. Bank officials said the office, which did not handle accounts, was not economical to keep open against the backdrop of deteriorating business conditions. The decision to close it was made last year, they said.

In August, Barclays announced a cut of 1,000 jobs in its international operations, on top of a layoff of 6,000 employees announced in May. In the first six months of this year, the bank reported a pretax profit of pounds 970 million, down from pounds 1.3 billion over the same period last year.

Other British banks have lower exposure to Russia, but they are also vulnerable to shocks coming from Moscow. When the government of Prime Minister Yevgeny Primakov was dismissed in May, shares of all three leading banking institutions - Barclays, National Westminster and Lloyds - each declined between 1.3 and 1.5 percent in one day.

By mid-1999, Barclays' assets exposed to risk in Russia amounted to less than pounds 100 million, Reuters reported.

Reassessment of Russian business is not confined to Barclays, especially in the wake of revelations last month that U.S. and British law-enforcement officials were probing possible money laundering through the Bank of New York. "All American banks conducted examination of Russian accounts," said a U.S. banker in Moscow, who declined to be identified.