Sanctions and Russian banks in Ukraine

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Russian banks in Ukraine 2014

In this article we will explore the reaction of Russian banks in the territory of Ukraine on the third package of EU sanctions in banking sphere and how does it affect Ukrainian depositors.

 

VTB - one of the popular banks in Ukraine


New sanctions largely hit the Russian banking sector. Russian banks with state participation (over 50%) are deprived of the possibility of long-term debt in the EU. Short-term borrowings are possible for up to 90 days. It is clear that the strategic planning and operation in such conditions are excluded.

 

Russian state-owned banks will not be allowed on the European stock market: from now on the EU  investors are prohibited from buying securities of such banking institutions and trade them. The prohibition applies to both corporate and individual residents of EU countries, both at the primary and secondary markets. Not only that, a ban on transactions with securities of Russian banks for EU residents extends to the whole world. 

 

The criteria for identifying a bank in the Russian Federation by the state is that the state has a majority stake. Enough 50% +1 share. First of all, it concerns the banks VneshEconomBank (VEB) and Gazprombank. 

 

Much more impressive list of "forbidden" banks in the United States. In sync with adopted sanctions by the Europeans VTB Bank, Agricultural Bank, SME Bank, Bank "Russia" and the Bank of Moscow are also in the list. 

Central Bank of the Russian Federation
Although the sanctions were introduced only a few days ago, the response to these sanctions do not make them wait. In particular having problems in some Russian banks on the territory of Ukraine with the issuance of deposits to citizens, particularly in Alfa Bank and VTB. These banks are serious players on Ukrainian market and until recently were considered among most stable and reliable financial institutions in our country. So it is obvious that these sanctions badly hits average Ukrainian depositor and Ukrainian society taking no good from this "struggle against aggressor" by Western countries. Government in Russia itself claimed that Central Bank will help and support problem banks and Russian depositors will not feel any problem with their money back.

 

Anyway these sanctions, adopted 1st of August, didn`t take effect by now. In prove we can cite the words of English "Financial Times" who wrote: "Indexes of MICEX (one of the largest universal stock exchenge) do not fall from the beginning of the week. Bond markets also react on sanctions rather coldly. Despite the increase in the cost of borrowing for the Russian government it`s below comparing to the last year peaks".

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