Barclays warns on ‘drastic’ sanction of Russian banks

Barclays warns on ‘drastic’ sanction of Russian banks

By BLOOMBERG

MOSCOW • A little-noticed provision in the draft law adding sanctions on Russia could hit some of the country’s largest banks, potentially doing more damage than a clause calling for a ban on purchases of sovereign debt that has worried investors, according to Barclays plc.

“The most drastic version of the sanctions on transactions with Russian banks, in which all of the state banks are sanctioned, would have significant ramifications for the entire Russian economy, which could be even more painful than sovereign debt measures,” said Liza Ermolenko, an economist at Barclays Capital in London. “These proposals are currently very broad and would likely need to be clarified further given the potential implications.”

One of the draft’s provisions calls for the US to “prohibit all transactions in all property and interests in property of one or more of the Russian financial institutions.” It lists some of the country’s largest lenders: Sberbank, VTB Bank, Gazprombank, Promsvyazbank, Rosselkhozbank and Vnesheconombank.

The list also includes Bank of Moscow, which was merged into VTB in 2016, while Vnesheconombank is listed twice in the text, without explanation.

The bill was introduced in the Senate last week by a bipartisan group of legislators, aiming to “impose crushing sanctions and other measures against Putin’s Russia until he ceases and desists meddling in the US electoral process”, according to co-sponsor Senator Lindsey Graham.

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