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Several banks are in talks with potential buyers in a bid to offload their exposure to Russian corporate loans as the market remains volatile in the wake of the Ukraine crisis, a Reuters report citing several banking sources said.

However, distressed buyers are said to be hesitant to act due to the limited trading activity caused by uncertainty over pricing and further sanctions.

Two sources said that many distressed debt buyers approached banks holding Russian loans, eyeing potential sale of the exposure at a discount.

Another banker told the news agency that he backed out of an offer to buy some Russian companies’ loan over the fears that further sanctions could strain the ability to recover value.

According to data by Bank for International Settlements, foreign banks have approximately $120bn exposure to Russia.

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The talks, which are at a very initial stage, signal the uncertainty among the lenders about how to manage their Russian exposure.

Banks choose to shed their exposure through bilateral transactions as they don’t want to be seen as discarding the paper in the market.

According to the report, distressed debt desks at two US banks approached another banker to discuss a possible interest in offloading sales.

The banker was quoted as saying: “I think they might say they’re interested, it’s exciting for distressed markets, but I think we’re some way off from seeing any real liquidity.”

Several sources added that the difficulty in deciding the price on Russian assets further limits activity, in addition to sanctions risks.

Some consider drops as temporary and prefer to hold tight rather than sell at big discounts, they added.

This week, JP Morgan said that it will exclude all Russian bonds from its emerging markets indexes by the end of this month.

The move is expected to add further constraints to trading Russian paper.