Russia’s systemically important banks could face the heat amid Russia-Ukraine crisis, says GlobalData

Sanctions placed on the top six Russian banks—Bank Rossiya, General Bank, IS Bank, Promsvyazbank, Vnesheconombank and Black Sea Bank*—by the US, the UK and EU will adversely affect Russia’s ability to raise funds, says GlobalData, a leading data and analytics company.

The EU has also introduced sanctions on Russia, including freezing assets and placing a travel ban on a number of officials. Meanwhile, Australia, Japan, and Canada also declared a host of sanctions, with Japan approving a ban on Russian bonds being issued in the country.

Parth Vala, Analyst at GlobalData, comments: “While these sanctions may seem rather mild, the West has warned Russia that it will impose more intense sanctions, potentially targeting its top systemically important banks such as Sberbank, VTB Bank, and Gazprombank. As of Q3 2021, these banks collectively had approximately RUB7.5 trillion in US dollar liabilities and RUB2.1 trillion in Euro liabilities. If sanctions were placed on these banks, it would seriously debilitate Moscow’s global financial activities and cause significant depreciation of the Ruble.”

Since the announcement of the sanctions, Moscow’s financial markets have dipped into the red, dropping by more than 15%. Amid high volatility and a drop in stock prices, the Russian Central Bank extended flexibility to financial institutions, in terms of relaxation in capital requirement limits—thereby ensuring enough liquidity to mitigate short-term debts.

*The UK government imposed sanctions on Bank Rossiya, General Bank, IS Bank, Promsvyazbank and Black Sea Bank; the US government put sanctions on Russia targeting its Vnesheconombank and Promsvyazbank and their subsidiaries; the EU put sanctions on Bank Rossiya, Vnesheconombank and Promsvyazbank

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