The Sberank in the center of Kiev is licking its wounds after yesterday's armed attack. Now they change the storefront and signs more often than they give commercial loans. Russian banks, it seems, are not so perturbed. Many Ukrainian citizens have decided not to return the money they owe on Russian bank loans. On the contrary, they are shifting their deposits to banks painted in the patriotic colors of yellow and blue with official permission from the government and National Bank of Ukraine.
200 billion for Kiev from Russian state corporations
"For the first half of 2016, VTB Bank suffered a loss in the amount of $200 million," says expert from the Eurasian Economic Union's Russian Institute of Strategic Studies Alisa Abaeva. "The National Bank of Ukraine is pursuing a specific policy towards Russian banks and putting the emphasis on influencing us with negative consequences," she explained.
Despite the fact that relations between the two countries have only worsened over the past two and a half years, the daughter subsidiaries of the biggest Russian banks continue to work, with state participation, in Ukraine as before. This includes Sberbank, VTB, Prominvestbank, and others. All of them are continuing to finance the once brotherly, and now Nazi-occupied country to the detriment of their self-esteem and wallet.
"From Ukrainian territory, banks are calling their Russian parent banks, central ones, and asking for aid because otherwise they will lose their license and have to leave the market. This is a risk of reputation for Sbernak and VEB, and they are starting to pump money into their Ukrainian 'daughters.' In doing so, we are nurturing the Ukrainian economy," the head of the sector on analytics and planned development of economic relations of the Russian Institute of Strategic Studies, Inna Lipushkina, explained to Tsargrad.
According to the assessment of the American rating agency Standard & Poor's, the cumulative risk of the largest Russian banks in Ukraine has reached $25 billion. This is about half a trillion rubles. Two thirds of the money is in loans to Ukrainian companies and the population while the other third is made up of borrowed funds issued to these subsidiaries by their parent companies. But they've worked out a mechanism for solving this problem - these branches simply call Moscow and ask about the next inter-bank or subordinated loan.
On average per year, Russian stage organizations grant loans to their subsidiaries in the total amount of $3 billion, which is around 200 billion rubles.
"Russia is the largest investor in the Ukrainian economy. This is not selling gas, and not trading partnership. And it is not merely a lender. It is an investor. We are investing [in Ukraine]," Inna Lipushkina stressed.
Sberbank and other sponsors of the Ukrainian economy
The most generous investor is the "humbled and humiliated" Sberbank. More than half of the total amount is accounted for by this bank. In addition to loans, the parent structures of Prominvestbank and VTB have allocated considerable funds for the capitalization of financial charges. Support for private credit institutions has also been observed, first and foremost in the case of Alfa-Bank.
In October 2015, the Russian ministry of finance stated that Russian banks had sent around $1 billion for capitalization to their daughter structures in Ukraine at the request of the National Bank of Ukraine. In the future, the same amount is planned to be allocated for the additional capitalization of banks.
At the same time, the head of the finance ministry, Anton Siluanov, hasn't blinked an eye. On another occasion, he demanded that Ukraine repay a loan: "Ukraine, as before, has overdue debts to the Russian Federation, the amount of which comes to $3.75 billion."
Let us recall that this loan was issued in December 2013 and the bond loan expired in December of last year. However, the government of "independent" Ukraine has refused to fulfill its obligations. "For our part, we have made every effort to ensure that our conditions allow for the restructuring of the loan to be fully negotiated," Anton Siluanov persuaded the participants of yet another meeting on the matter.
What is Minister Siluanov embarrassed to admit?
Instead of asking to be brought back under the warm Russian wing, Ukraine continues to aggravate the situation, such as by bombing power lines in the Kherson region, closing the Ukrainian air space to Russian airlines, the Groysman's government's rejection of Russian gas, and the failed sabotage attempt in Crimea.
But Russian, including state corporations live in a parallel reality. Despite the vileness of their neighbor's actions, they continue to pump money into the Ukrainian economy whose hood is tightly pulled over its head by overseas advisors. The total amount of financial investments over the past two years amounts to around $6 billion, or 380 billion rubles. In fact, this is twice more than the debt whose return Mr. Siluyanov has been so zealously seeking.
The Central Bank of Russia stays to the side. The regulator has no point of view on the current situation.
The Central Bank approves Nazis' taking out money
"The National Bank of Ukraine, with its reserves policy, is methodically pumping money out of Russia," Inna Lipushkina affirmed. She continued: "Banks are unable to agree amongst themselves on a strategy for foreign investment. They do not want to show the skeletons they have in the closet. They don't want to reveal something, negotiate, or reach some kind of compromise. And the Central Bank does not have a unified strategy."
In this RISS expert's opinion, "in this case, the Central Bank of Ukraine's policy is strategically ahead of the Central Bank of Russia, which has absolutely no policy on this issue."
Ukraine can bring down Russia's financial system
In the case of an escalation of the conflict in Ukraine, there are potentially direct consequences for the Russian financial system. For example, creditors and the holders of securities with Vneshekonombank, the parent company of Prominvestbank, could demand a lump sum of $21 billion to be repaid if its daughter goes bankrupt.
But the so-called liberal wing of the government seemingly doesn't bother itself with the financial health of Russia. Soon enough, some famous international journal will award the financial minister or head of the Central Bank a title for putting another billion in the US treasury.
Russian state and private business, by continuing to fund Nazi Ukraine, are taking huge losses which will ultimately be shifted onto the shoulders of Russian citizens.
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