EU banks in Russia react to US sanctions threat

It learn the riot act in a press launch on Thursday (7 March).

Senior Treasury official Anna Morris additionally met with the Austrian authorities and with RBI executives in Vienna on Thursday and Friday.

RBI advised EUobserver “as a matter of precept, we don’t remark publicly on discussions with representatives of authorities”.

However the financial institution was eager to scrub its palms of Russia’s war-effort all the identical.

Ukraine’s Nationwide Company on Corruption Prevention (NACP) has named RBI in its blacklist of worldwide “Sponsors of Warfare”.

And the Austrian financial institution’s spokesman stated on Friday: “Sure, RBI wish to proceed its dialogue with NACP to make sure that it’s faraway from this checklist”.

However for its half, Kyiv doubled down amid the brand new US strain.

RBI was “a serious monetary pipeline between the EU and Russia”, the NACP’s sanctions director, Agiya Zagrebelska, stated on Friday.

“Is the financial institution [RBI] capable of handle dangers and never be a part of any [sanctions] circumvention schemes, having such a giant place within the Russian market — particularly given the civil-military fusion of the Russian financial system?”, she stated.

RBI made €1.3bn in revenue in Russia final yr, the place it employed 9,942 individuals in 490 retail branches.

It additionally took half in a Russian scheme on mortgage perks for Russian army conscripts.

“In line with the Federal Legislation of the Russian Federation No. 377-FZ adopted on 7 October 2022, a mortgage moratorium for conscripts has been put in from 7 October 2022 till 31 December 2023. As a authorized entity registered within the Russian Federation, RBRU [RBI’s Russian subsidiary] is required to stick to Russian legal guidelines,” it beforehand advised EUobserver.

And for Ukraine’s Zagrebelska “the problem [of EU firms’ Russia war-support] goes far past Austria’s borders”.

RBI is one in every of eight main EU banks nonetheless in Russia.

The others are: Dutch lender ING, Germany’s Commerzbank and Deutsche Financial institution, Hungary’s OTP Financial institution, Italy’s Intesa SanPaolo and Unicerdit, and Sweden’s SEB.

OTP Financial institution, which was on Ukraine’s Sponsors of Warfare checklist, posted a 125 % enhance in its Russia revenue in 2023 on Friday, pocketing €242m, as an illustration.

It has 82 retail branches in Russia, employs 2,018 individuals there, and in addition took half in Russia’s “mortgage moratorium for conscripts” scheme, in accordance with its Russian web site.

The US Treasury did not reply when EUobserver requested if Morris may come knocking on OTP Financial institution’s door in Budapest in future. OTP Financial institution did not reply both.

German banks

However US Treasury officers have additionally briefed German financiers on the brand new sanctions menace, Commerzbank stated.

Talks “in [German] banking associations included common discussions immediately with OFAC representatives on this matter”, a Commerzbank spokeswoman stated on Friday, referring to the Workplace of Overseas Property Management — the US Treasury’s monetary intelligence unit.

The talks started after OFAC acquired new powers on 22 December to punish what the US referred to as “Russian Dangerous Overseas Actions”.

Commerzbank does company banking for largely German firms lively in Russia.

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It would not disclose its Russian revenue and employs about 130 individuals there.

When requested if it feared potential US sanctions, Commerzbank stated it “treats sanctions compliance with the utmost significance and has taken risk-based measures to scale back its Russia-related sanctions danger publicity”.

ING advised EUobserver the brand new US guidelines meant “banks might be sanctioned or denied entry to the US-dollar clearing system for a sure time frame, supplied the financial institution has facilitated important transactions that benefited the Russian army department.”

However the Dutch financial institution stated it did not really feel in danger as a result of it “complies with all worldwide sanctions legal guidelines together with UN, EU, and OFAC”.

ING additionally does company banking in Russia, the place its Moscow workplace employs some 270 individuals and manages €1.3bn of loans.

Trump impact

In the meantime, if the US Treasury was to make good on its menace to “minimize off” a prime EU financial institution, it would not be the primary time the US imposed sanctions on a European champion.

Former US president Donald Trump imposed penalties on corporations constructing the Nord Stream 2 gasoline pipeline from Russia to Germany in 2019, infuriating Berlin and the European Fee.

The EU additionally issued a “blocking regulation” in 2018 forbidding EU corporations from complying with Trump’s Cuba and Iran extra-territorial sanctions.

However the EU overseas service and Austria declined to criticise the US Treasury’s menace in opposition to RBI on Friday, with the EU overseas service merely spelling out its common philosophy as an alternative.

“On the whole, EU sanctions are autonomous and are binding for EU entities/residents solely. They don’t seem to be utilized extraterritorially and we don’t discover extraterritoriality of sanctions choices in keeping with our understanding of worldwide legislation”, EU spokesman Peter Stano advised EUobserver.