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Russian Banks Shrug Off U.S. Sanctions, For Now

Published: July 18, 2014 (Issue # 1820)



  • Gazprombank is now barred from medium and long-term dollar financing.
    Photo: Denis Grishkin / Vedomosti

The two major Russian state-controlled banks hit with U.S. sanctions will be able to shrug off the measures, which fall far short of sector-wide sanctions, analysts said Thursday.

However, the new wave of sanctions will likely raise the cost of borrowing and slam the door on Russian banks' access to international loans, just as the market was beginning to revive.

The measures taken by the U.S. on Wednesday bar two of Russia's largest banks, Gazprombank and Vneshekonombank, or VEB, from access to medium- and long-term dollar financing, which the U.S. says will "impose additional significant costs on the Russian government for its continued activities in Ukraine."

On the face of it, the new measures amount to massive escalation. Previous rounds of sanctions hit relative banking minnows, while VEB and Gazprombank are two of the country's largest lenders. Gazprombank, Russia's No. 3 bank, has assets worth some 4 trillion rubles ($116 billon). VEB, though not strictly speaking a bank but a government-controlled corporation, is the state's preferred tool for funding infrastructure projects and propping up industry and small business. It aims to grow its loan portfolio to 850 billion ($25 billion) by the end of this year.

Yanking the carpet from under these lenders would send Russia's economy spinning, but the new sanctions do no such thing, analysts said.

Earlier sanctions against SMP Bank and Bank Rossiya, whose owners were accused by the U.S. of being members of President Vladimir Putin's inner circle, effectively ejected them from the financial world beyond Russia's borders. Western companies were barred from dealing with them, and U.S.-based payment systems Visa and MasterCard stopped servicing them.

Wednesday's sanctions, however, target only financing for periods of more than 90 days, and even that restriction will be easy to outmaneuver with the help of canny financial advisers, according to Maxim Osadchy, head of analysis at Moscow-based Corporate Finance Bank.

Visa and MasterCard, meanwhile, announced Thursday that they would continue to service the two banks.

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ALL ABOUT TOWN

Wednesday, Aug. 20


AmCham gets back to business after a summer hiatus with todays EHS Committee Working Group Meeting. Check their website for more details.



Thursday, Aug. 21


Time is running out to see the fantastic creations on display at the 2014 Sand Castle Festival on the beach at the Peter and Paul Fortress. Adhering to the theme of Treasure Island, visitors can wander amongst larger-than-life interpretations of pirate life or attend one of the workshops held to educate a future generation of sand artists. The castles will remain on the beach until Aug. 31.



Friday, Aug. 22


Get ready to pledge allegiance to the flag during National Flag Day, paying tribute to when, 23 years ago today, the iconic hammer-and-sickle was replaced with the tricolor that now flutters in the wind. Petersburgers will be treated to a free concert on Palace Square, a military parade and a culminating air show featuring Russias Russian Knights stunt pilots.



Saturday, Aug. 23


Uppsala Park plays host to Fairy Noon today, a performance of five separate fairy tales ranging from folk classics to more haunting selections. There will be three different renditions of the tales throughout the day and tickets start at 500 rubles ($13.80) for adults and 300 rubles ($8.30) for children.


Classic Finnish cartoon characters the Moomins expect to receive a warm welcome from Russian fans during todays Moomin Festival at the Pearl Plaza Shopping Center at 51 Petergofskoye Shosse. Become a kid again or introduce a new generation to the beloved creation of Finnish writer Tove Jansson.



Sunday, Aug. 24


The tortured genius of Dutch master Vincent van Gogh gets his day in the centers Konnushnaya Ploschad during Make Art Like Van Gogh, a daylong celebration of the artist that will allow amateur artists to try and replicate the work that made the famed painter world-renowned.


Experience a variety of dances highlighting the diversity of the world around as at the final day of the Ethno-Dance International Dance Festival that has been at the St. Petersburg Humanitarian University of Trade Unions this past week. Tonights performance will feature Egyptian dancers accompanied by local orchestras.



Monday, Aug. 25


Today kicks off the Elena Obraztsovoy International Competition for Young Vocalists in the large hall of the Shostakovich Philharmonic. Talented youngsters will showcase their range over the next six days before a winner is chosen on Aug. 30.



Tuesday, Aug. 26


Love movies but hate all those words? Then check out Rodina Cinema Centers Factor of Consensus film forum this evening. Silent movie classics from the beginning of the 20th century will be screened and accompanied by a pianist, who will provide the soundtrack for the ongoing action. The screenings begin at 7 p.m. Check Rodinas website for more details.



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