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

    Former US Envoys Urge Obama to Delay Troop Cuts in Afghanistan

    Keeping troop levels up during conflict with both Taliban and Islamic State is necessary to support Kabul government, they say

    First Lady to Visit Africa to Promote Girls' Education

    Michele Obama will be joined by daughters and actresses Meryl Streep and Freida Pinto

    Video NYSE Analyst: Brexit Will Continue to Place Pressure on Markets

    Despite orderly pricing and execution strategy at the New York Stock Exchange, analyst explains added pressure on world financial markets is likely

    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.
    Brexit Vote Plunges Global Markets Into Uncharted Territoryi
    X
    June 24, 2016 9:38 PM
    British voters plunged global markets into unknown territory after they voted Thursday to leave the European Union. The results of the Brexit vote, the term coined to describe the referendum, caught many off guard. Analysts say the resulting volatility could last for weeks, perhaps longer. Mil Arcega reports.
    Video

    Video Brexit Vote Plunges Global Markets Into Uncharted Territory

    British voters plunged global markets into unknown territory after they voted Thursday to leave the European Union. The results of the Brexit vote, the term coined to describe the referendum, caught many off guard. Analysts say the resulting volatility could last for weeks, perhaps longer. Mil Arcega reports.
    Video

    Video Orlando Shooting Changes Debate on Gun Control

    It’s been nearly two weeks since the largest mass shooting ever in the United States. Despite public calls for tighter gun control laws, Congress is at an impasse. Democratic lawmakers resorted to a 1960s civil rights tactic to portray their frustration. VOA’s Carolyn Presutti explains how the Orlando, Florida shooting is changing the debate.
    Video

    Video Tunisian Fishing Town Searches for Jobs, Local Development Solutions

    As the European Union tries to come to grips with its migrant crisis, some newcomers are leaving voluntarily. But those returning to their home countries face an uncertain future.  Five years after Tunisia's revolution, the tiny North African country is struggling with unrest, soaring unemployment and plummeting growth. From the southern Tunisian fishing town of Zarzis, Lisa Bryant takes a look for VOA at a search for local solutions.
    Video

    Video 'American Troops' in Russia Despite Tensions

    Historic battle re-enactment is a niche hobby with a fair number of adherents in Russia where past military victories are played-up by the Kremlin as a show of national strength. But, one group of World War II re-enactors in Moscow has the rare distinction of choosing to play western ally troops. VOA's Daniel Schearf explains.
    Video

    Video Experts: Very Few Killed in US Gun Violence Are Victims of Mass Shootings

    The deadly shooting at a Florida nightclub has reignited the debate in the U.S. over gun control. Although Congress doesn't provide government health agencies funds to study gun violence, public health experts say private research has helped them learn some things about the issue. VOA's Carol Pearson reports.
    Video

    Video Trump Unleashes Broadside Against Clinton to Try to Ease GOP Doubts

    Recent public opinion polls show Republican Donald Trump slipping behind Democrat Hillary Clinton in the presidential election matchup for November. Trump trails her both in fundraising and campaign organization, but he's intensifying his attacks on the former secretary of state. VOA National Correspondent Jim Malone reports.
    Video

    Video Muslim American Mayor Calls for Tolerance

    Syrian-born Mohamed Khairullah describes himself as "an American mayor who happens to be Muslim." As the three-term mayor of Prospect Park, New Jersey, he believes his town of 6,000 is an example of how ethnicity and religious beliefs should not determine a community's leadership. Ramon Taylor has this report from Prospect Park.
    Video

    Video Internal Rifts Over Syria Policy Could Be Headache for Next US President

    With the Obama administration showing little outward enthusiasm for adopting a more robust Syria policy, there is a strong likelihood that the internal discontent expressed by State Department employees will roll over to the next administration. VOA State Department correspondent Pam Dockins reports.
    Video

    Video Senegal to Park Colorful ‘Cars Rapide’ Permanently

    Brightly painted cars rapide are a hallmark of Dakar, offering residents a cheap way to get around the capital city since 1976. But the privately owned minibuses are scheduled to be parked for good in late 2018, as Ricci Shryock reports for VOA.
    Video

    Video Florida Gets $1 Million in Emergency Government Funding for Orlando

    The U.S. government has granted $1 million in emergency funding to the state of Florida to cover the costs linked to the June 12 massacre in Orlando. U.S. Attorney General Loretta Lynch announced the grant Tuesday in Orlando, where she met with survivors of the shooting attack that killed 49 people. Zlatica Hoke reports.
    Video

    Video How to Print Impossible Shapes with Metal

    3-D printing with metals is rapidly becoming more advanced. As printers become more affordable, the industry is partnering with universities to refine processes for manufacturing previously impossible things. A new 3-D printing lab aims to bring the new technology closer to everyday use. VOA's George Putic reports.
    Video

    Video Big Somali Community in Minnesota Observes Muslim Religious Feast

    Ramadan is widely observed in the north central US state of Minnesota, which a large Muslim community calls home. VOA Somali service reporter Mohmud Masadde files this report from Minneapolis, the state's biggest city.

    Special Report

    Adrift The Invisible African Diaspora