Banks face $1bn Yukos hit

WESTERN banks face combined losses of up to $1bn (£550m) after Russian oil giant Yukos defaulted on its debt and warned of potential insolvency. HSBC is thought to be owed some £55m.

Moscow police raided Yukos last weekend. President Vladimir Putin has targeted the company and former boss Mikhail Khodorkovsky in his campaign against the country's new oligarchs.

Khodorkovsky faces fraud and tax evasion charges, Yukos a £3.5bn bill for back taxes.

Creditors are not pushing for insolvency. Yukos shares, down 65% since last autumn, fell a further 10% yesterday.

Concerns have knocked the Russian stock market by nearly a quarter since the spring. London trust JP Morgan Fleming Russia, 202p in April, has fallen to 157p (down 1 1/2p), while broader rival Barings Emerging Europe, 317p two months ago, stands at 268 1/2p (down 1/2p). Both hold Yukos shares.

Chelsea football boss Roman Abramovich aborted a merger attempt between his Sibjeft group and Yukos last winter as Putin swooped. A company with links to Abramovich has gone bankrupt owing £8m.