HSBC has told staff to start winding down relations with a number of Russian banks, including VTB, the country’s second-largest lender, it was reported on Monday.
According to Reuters, citing an internal memo dated 27 February, HSBC has advised staff on how to apply the latest round of sanctions imposed on Russia, and said the UK Office of Financial Sanctions had authorised the winding down of “certain transactions involving VTB Bank and certain UK institutions”.
The email also lists other Russian companies subject to sanctions, including development bank VEB. HSBC told staff that under US sanctions, an entity that is 50% owned or more, directly or otherwise, by one or more blocked persons is itself considered blocked, whether or not on the sanctions list, Reuters said.
HSBC has so far yet to comment on the report.
Financial institutions are starting to implement restrictions on Russia after America, Canada, the UK and European Union imposed increasingly stringent economic and financial sanctions on the country, in response to its actions in Ukraine.
The UK government initially imposed restrictions on five Russian banks, though those did not include VTB, and three individuals. On Thursday, the assets of all major Russian banks in the UK were then frozen, this time including VTB. Trading in a London-listed subsidiary of the bank was also halted after the London Stock Exchange suspended its membership.
Over the weekend, Western allies then agreed to remove Russia from the Swift global payments system, and on Monday, in concert with the US and EU, the UK confirmed that people were now prohibited from undertaking financial transactions involving the Central Bank of Russia, the Russian National Wealth Fund and the ministry of finance.
It is the first time that a G20 central bank has been sanctioned.
HSBC has little direct exposure to Russia. Last week, the bank said that it had around 200 employees in the country, which accounted for annual revenues of around $15m. HSBC’s global annual income is around $50bn.
