Europeans step up sanctions against Russian banks

Posted Apr 11, 2022, 3:14 PM

The noose of the Europeans is tightening on the Russian banks. At the end of the last round of sanctions recorded in Brussels, four new establishments are subject to asset freezing restrictions: the second and sixth public banks in the country, VTB and Otkritie Bank, the public bank close to the defense community Novyikombank, as well as the third Russian private establishment (and ninth banking player in Russia) Sovcombank.

“Any transaction with these entities is prohibited, their assets are frozen and it is forbidden to provide them with funds or economic resources”, indicates the European Commission. These measures will hit hard. These four banks, which are now completely cut off from the financial systems, represent 23% of the market share of the Russian banking system”.

This fifth wave of sanctions more than doubles the total number of banks subject to asset freezes. And from there too, their European subsidiaries. Until now, only PSB, Rossiya and VEB were affected by this measure.

A historic player in the Union, VTB has 8 billion euros in assets in Europe and 160,000 private customers. Sovcombank and Otkritie Bank are present in Cyprus.

Two major exceptions

Worried about the vagueness of sanctions, European banks are gaining clarity. The list of banks subject to a freezing of their assets is now completely aligned with that of the seven Russian entities banned from accessing the international financial network Swift, and whose subsidiaries in Europe were not targeted… It is also in line with the US freeze list.

Clearly, there are now almost no loopholes for Europeans who would like to continue to maintain financial relations with these establishments.

However, two gaps remain in the sanctions of the 27 Member States. The first Russian bank with public capital Sberbank, whose assets have just been totally blocked by the United States, is not targeted by Brussels.

Neither does the bank of the gas giant Gazprom, through which the Europeans’ energy purchases pass. The latter have paid 35 billion euros since the start of the war to Russia, underlined Josep Borrell, the head of diplomacy of the European Union.

Other banks can also continue to operate technically on European soil, such as Alfa Bank, the largest private Russian, present in Luxembourg and Cyprus. The Italian UniCredit holds about 10% and has not exited its capital at this stage.

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