News / Europe

    Sources: Russian Bank Subsidiaries in EU to Escape Sanctions

    FILE - People stand in a line as they wait to enter a branch of Sberbank of Russia bank in the Crimean city of Simferopol April 7, 2014.
    FILE - People stand in a line as they wait to enter a branch of Sberbank of Russia bank in the Crimean city of Simferopol April 7, 2014.
    Reuters

    New US, EU sanctions on Russia

    • Until July 29, 2014, sanctions solely targeted individuals and organizations accused of directly threatening Ukraine and its interests
    • New sanctions prohibit Russian state-owned banks from raising funds in Western capital markets
    • About 30% of Russia’s banking sector will be impacted
    • Energy-related technology used for Russia’s oil exploration and development is blocked
    • Affected areas include technology relating to deep-water or Arctic drilling and exploration projects
    • EU officials say the ban extends to about 10% of overall energy exports to Russia
    • Restrictions on Russian arms exports
    • A ban on trade of dual-use sensitive defense technologies with Russia

    Sources: Reuters and multiple news reports

    Russian bank subsidiaries based in the European Union will be exempt from EU economic sanctions designed to choke off finance for big state-owned Russian lenders, sources familiar with the discussions told Reuters on Wednesday.

    These sources said the exemption, which EU officials said they would monitor closely to avoid abuse, meant Sberbank and VTB subsidiaries could operate normally within EU member states.

    The step will come as a relief to Austria, where the two big state-controlled Russian lenders have the headquarters of their European operations, the sources said.

    Hungary and Slovakia had also said the latest sanctions - aimed at punishing Moscow for fomenting Ukraine's political crisis - should not apply to Russian banks operating in the EU to prevent disruptions on their retail operations, two sources close to the discussions told Reuters.

    Details of the EU sanctions - which include banning state-controlled Russian banks from raising long-term financing by selling stock or bonds on EU markets - are due to be published on Thursday and enter into force on Friday.

    The European Commission has not yet published a list of the Russian banks that will be affected but has said it will apply only to Russian banks that are more that 50 percent owned by the state or other public authorities.

    Sberbank is majority-owned by the Russian central bank, and VTB is majority-owned by the government.

    “We limited the geographical scope to Russia. We did not want to include EU subsidiaries registered and established in the EU,” one EU source said, seeing as the risk as “manageable”  that these local lenders could transfer cash to their parents.

    “These subsidiaries never issued corporate bonds or equities in the past three or four years, so it will be extremely visible if they start doing it now,” the official said.

    Bank run risk

    Sberbank Europe operates across central and eastern Europe after buying Austrian Volksbanken's VBI eastern European arm in 2012, and VTB Bank (Austria) has operations in Germany and France as well.

    “When our bank supervisors looked into this they said: 'Listen, guys, what you do not want is to create a bank run,”' one government official said on condition he not be named.

    He dismissed the suggestion that the move was an attempt to head off retaliation by Moscow against Austrian banks active in Russia such as Raiffeisen Bank International.

    An EU sanctions committee will review how the system is functioning and ensure that EU-based subsidiaries are not funneling funds they raise back to their parents. “We are not blind and deaf and stupid,” the government official said.

    Loans, including syndicated loans, are not covered by the sanctions but European banks will probably be reluctant to arrange lending to Russian borrowers.

    Sberbank Europe and VTB Bank (Austria) declined comment.

    VTB, which will also be hit by U.S. sanctions that thwart its ability to access dollar financing, said earlier it was ready to borrow in other currencies and markets.   

    You May Like

    Saudi Arabia’s New Female Politicians in the Other Room 

    Many in Saudi Arabia say elected representatives should share unsegregated spaces; according to a recent survey, more than half the Saudi population, both men and women, prefer to work in a segregated place

    Russia Not ‘Apologetic’ for Syria Airstrikes

    With Moscow criticized for targeting armed opponents of President Assad, Russia’s UN envoy says his country ‘acting in a very transparent manner’

    Pakistan Warns of Islamic State's Growing Reach

    Aftab Sultan, General Director General of Intelligence Bureau (IB), briefed Senate Committee in closed hearing, saying that IS-linked groups have been expanding in Pakistan

    This forum has been closed.
    Comments
         
    There are no comments in this forum. Be first and add one

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Russia's Car Sales Shrink Overall, But Luxury and Economy Models See Growthi
    X
    February 10, 2016 5:54 AM
    Car sales in Russia dropped by more than a third in 2015 because of the country's economic woes. But, at the extreme ends of the car market, luxury vehicles and some economy brands are actually experiencing growth. VOA's Daniel Schearf reports from Moscow.
    Video

    Video Russia's Car Sales Shrink Overall, But Luxury and Economy Models See Growth

    Car sales in Russia dropped by more than a third in 2015 because of the country's economic woes. But, at the extreme ends of the car market, luxury vehicles and some economy brands are actually experiencing growth. VOA's Daniel Schearf reports from Moscow.
    Video

    Video Civil Rights Pioneer Remembers Struggle for Voting Rights

    February is Black History Month in the United States. The annual, month-long national observance pays tribute to important people and events that shaped the history of African Americans. VOA's Chris Simkins reports how one man fought against discrimination to help millions of blacks obtain the right to vote
    Video

    Video Jordanian Theater Group Stages Anti-Terrorism Message

    The lure of the self-styled “Islamic State” has many parents worried about their children who may be susceptible to the organization’s online propaganda. Dozens of Muslim communities in the Middle East are fighting back -- giving young adults alternatives to violence. One group in Jordan is using dramatic expression a send a family message. Mideast Broadcasting Network correspondent Haider Al Abdali shared this report with VOA. It’s narrated by Bronwyn Benito
    Video

    Video Migrant Crisis Fuels Debate Over Britain’s Future in EU

    The migrant crisis in Europe is fueling the debate in Britain ahead of a referendum on staying in the European Union that may be held this year. Prime Minister David Cameron warns that leaving the EU could lead to thousands more migrants arriving in the country. Meanwhile, tension is rising in Calais, France, where thousands of migrants are living in squalid camps. VOA's Henry Ridgwell reports.
    Video

    Video Valentine's Day Stinks for Lebanese Clowns

    This weekend, on Valentine's Day in Lebanon, love is not the only thing in the air. More than half a year after the country's trash crisis began, the stink of uncollected garbage remains on the streets. Step forward "Clown Me In," a group of clowns who use their skills for activism. Before the most romantic day of the year the clowns have released their unusual take on love in Lebanon -- in a bid to keep the pressure up and get the trash off the streets. John Owens reports from Beirut.
    Video

    Video Families Flee Aleppo for Kurdish Regions in Syria

    Not all who flee the fighting in Aleppo are trying to cross the border into Turkey. A VOA reporter caught up with several families heading for Kurdish-held areas of northern Syria.
    Video

    Video Rocky Year Ahead for Nigeria Amid Oil Price Crash

    The global fall in the price of oil has rattled the economies of many petroleum exporters, and Africa’s oil king Nigeria is no exception. As Chris Stein reports from Lagos, analysts are predicting a rough year ahead for the continent’s top producer of crude.
    Video

    Video 'No Means No' Program Targets Sexual Violence in Kenya

    The organizers of an initiative to reduce and stop rape in the informal settlements around Kenya's capital say their program is having marked success. Girls are taking self-defense classes while the boys are learning how to protect the girls and respect them. Lenny Ruvaga reports from Nairobi.
    Video

    Video Chocolate Lovers Get a Sweet History Lesson

    Observed in many countries around the world, Valentine’s Day is sometimes celebrated with chocolate festivals. But at a festival near Washington, the visitors experience a bit more than a sugar rush. They go on a sweet journey through history. VOA’s June Soh takes us to the festival.
    Video

    Video 'Smart' Bandages Could Heal Wounds More Quickly

    Simple bandages are usually seen as the first line of attack in healing small to moderate wounds and burns. But scientists say new synthetic materials with embedded microsensors could turn bandages into a much more valuable tool for emergency physicians. VOA’s George Putic reports.
    Video

    Video Researchers Use 3-D Printer to Produce Transplantable Body Parts

    Human organ transplants have become fairly common around the world in the past few decades. Researchers at various universities are coordinating their efforts to find solutions -- including teams at the University of Pennsylvania and Rice University in Houston that are experimenting with a 3-D printer -- to make blood vessels and other structures for implant. As VOA’s Greg Flakus reports from Houston, they are also using these artificial body parts to seek ways of defeating cancerous tumors.
    Video

    Video Helping the Blind 'See' Great Art

    There are 285 million blind and visually impaired people in the world who are unable to enjoy visual art at a museum. One New York photographer is trying to fix this situation by making tangible copies of the world’s masterpieces. VOA correspondent Victoria Kupchinetsky was there as visually impaired people got a feel for great art. Joy Wagner narrates her report.
    Video

    Video German Artists to Memorialize Refugees With Life Jacket Exhibit

    Sold in every kind of shop in some Turkish port towns, life jackets have become a symbol of the refugee crisis that brought a million people to Europe in 2015.  On the shores of Lesbos, Greece, German artists collect discarded life jackets as they prepare an art installation they plan to display in Germany.  For VOA, Hamada Elrasam has this report from Lesbos, Greece.
    Video

    Video E-readers Help Ease Africa's Book Shortage

    Millions of people in Africa can't read, and there's a chronic shortage of books. A non-profit organization called Worldreader is trying to help change all that one e-reader at a time. VOA’s Deborah Block tells us about a girls' school in Nairobi, Kenya where Worldreader is making a difference.