Despite what’s happening in Ukraine, it was not the responsibility of businesses to engage in politically-motivated exits, according to Goldman Sachs CEO David Solomon, as his bank decided to leave the country following a multitude of international corporations that have forfeited their operations in Russia.
The task of deciding a boycott lies with the United States government, while the job of a financial institution is to make sure it is “executing against the legal letter of the law of those sanctions,” as well as the spirit of the sanctions, Solomon said in an interview with Time magazine.
“I don’t think businesses are supposed to decide how global trade works in the world. Government sets policy and then businesses follow that policy. I happen to agree very strongly with the policy,” Solomon said.
“What’s going on in Ukraine is absolutely horrible. I think the actions taken are reasonable and powerful actions. But you ask, ‘are we doing a good job, ostracizing Russia?’ That’s not our job. And by us, I mean the financial industry broadly.”
After the Russian invasion, a former Goldman Sachs banker posted an open letter to Solomon on LinkedIn, asking that the company terminate its operations in Russia and relocate staff from Moscow in order to remain on the “right side of history.” Goldman Sachs later announced on March 10 that they were exiting the country, becoming the first major bank to make such a move.
Goldman Sachs is winding down its operations in Russia to maintain compliance with “regulatory and licensing requirements,” the company said in a statement. Some of the employees from the Moscow office are being shifted to Dubai, United Arab Emirates.
Goldman Sachs is said to have had a total Russian exposure of $940 million by the end of 2021, including $650 million in credit, accounting for less than 10 basis points of the bank’s total assets, as per analysts from Bank of America.
In early March, Goldman Sachs revealed that it scaled down Russian exposure in its GQG Partners international equity fund to around $222 million, down from more than $1.7 billion in September 2021. At the end of February, the fund only had 0.99 percent exposure in Russia.
“Coming into 2022, we saw attractive growth opportunities and valuations in many Russian companies,” the bank said in a March 3 update (pdf). “The actions by the Russian government this year began to outweigh the positive fundamentals we were seeing in many companies. We have been reducing our exposure to Russian holdings since early January, and they are now concentrated in the energy sector.”
A few hours after Goldman Sachs announced its exit from Russia, JPMorgan Chase also declared that it was moving out. In its most recent filings, Russia was not listed in the top 20 countries where the company had the greatest financial exposure. JPMorgan Chase employs about 160 people in Moscow.
Deutsche Bank, with $3.18 billion in credit-risk exposure to Russia and Ukraine, said that it had scaled down its exposure in Russia in recent weeks.