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Russia to Create Bank for Sanctions-Hit Defense Industry

FILE - Russian S-400 surface-to-air missile systems are seen on display during a parade at Red Square in Moscow, Russia, May 9, 2015. Russia's defense industry, which has been struggling to obtain financing due to U.S. sanctions, will soon have its own state bank to turn to, Russia's Finance Ministry announced Thursday.

Russia announced Thursday the creation of a state-owned bank to finance its defense industry which has encountered difficulties in obtaining financing due to US sanctions.

In a statement the Russian Finance Ministry said the bank would specialize in "conducting operations related to state defense orders and large state contracts."

Russian media have presented the opening of such a bank as a means to protect the country's other lenders from Western sanctions on Russia's military-industrial complex over the conflict in eastern Ukraine, including recently tightened U.S. measures.

At the end of December, one of Russia's leading private banks, Alfa, said it would stop working with firms in the defense sector because of the U.S. sanctions.

Russian media have said the bank could be created on the base of an existing medium-sized bank.

Without mentioning any details, the Finance Ministry said in its statement the bank would soon become the property of the state.