Russia, CIS banks least contagious from eurozone crisis,S&P

Russia and the Commonwealth of Independent States (CIS) banks will avoid serious consequences from the EU debt crisis as their direct links with the EU lenders are limited; International rating Agency Standard and Poor’s said in a report on Monday.

Some analysts say Western banks will have to reduce their foreign investment due to economic difficulties in the eurozone.However, this will have little effect on the Russian and CIS banking systems as they are little dependent on direct foreign investment from EU lenders.“We believe the current economic struggles of some members of the European Economic and Monetary Union and their banking systems, along with looming tighter capital and liquidity rules for all banks under Basel III, will likely lead some Western European banks to scale back their investments in the form of liquidity or capital abroad,” the report says. "In our view, the major source of risk for Russian and CIS banking systems is deterioration of global macroeconomic fundamentals rather than direct contagion from difficulties at euro area banks," said Standard & Poor's credit analyst Pierre Gautier. However S&P did say the Russian and CIS banking systems could suffer if the global economic slowdown weighed on oil and commodities prices or on local currencies and local stock markets for a long time.