RTWed, 02 Mar 2022 12:07 UTC
© pymnts.comEU • Russia • SWIFT
The European Union has disconnected Russian banks subject to sanctions from the SWIFT global payment network. Seven major lenders in the country have been targeted, including
VTB, Rossiya, Otkritie, Novikombank, Promsvyazbank, Sovcombank, and VEB.RF. Russia's largest bank, Sberbank, is not on the list for now. The news was announced in the EU's official journal on Wednesday.
The banks now have 10 days to stop their SWIFT operations. According to a senior EU official, those on the list were selected based on their connections to the Russian government:
"All these banks that we have listed under SWIFT... are all [included] based on their connection to the state and the implicit connection to the war effort. We have not gone for a blanket ban across the whole banking system."
Neither Sberbank nor Gazprombank has so far been targeted, as they are the main channels for payments for Russian oil and gas, which have not yet faced EU penalties. The two will be
subject to other sanctions, however, the official stated.
Comment: As sweeping financial changes are taking place, Russia will not be the only victim. Knee-jerk decisions impact the EU's global commerce and financial structures as well:
Russia's key state bank has revealed that it will pull out of the European Union's financial markets, citing threats to the safety of employees and its branches in the wake of Moscow's attack on Ukraine. Sberbank announced that the decision had been made as a result of its subsidiary banks facing "an abnormal outflow of funds."
"Due to the instruction of Russia's Central Bank, Sberbank [Russia] will not be able to supply liquidity to its European subsidiaries."
However, it offered reassurances that its subsidiary banks had "a high level of capital and quality of assets," and that customer deposits were "insured in line with local legislation." Sberbank had been operational in a number of EU member states, including Germany, Austria, Croatia, and Hungary, and boasted European assets worth €13bn (over $14.4bn) at the end of 2020.
Brussels revealed on Wednesday that the EU had disconnected embargoed Russian banks from the global payment network SWIFT. A number of major lenders, including VTB and Rossiya, are subject to the cut-off.
-
DHL is the latest international logistic giant to stop deliveries to Russia and Belarus, the company confirmed on Wednesday. FedEx and UPS announced suspensions of service earlier this week. Germany's DHL, in an alert published on its website, said:
"Our inbound services to Russia and Belarus have been suspended, which is why we are also not accepting shipments to those countries until further notice."
DHL's offices and operations in Ukraine have also been closed until further notice.
US-based UPS announced a temporary suspension of all international shipping services to and from Russia, Belarus and Ukraine on Monday, saying that packages already in transit will be returned to senders free of charge.
FedEx however is continuing exports from Russia with the exception of time-critical shipments, a notice on its website says, though deliveries to Russia have also been put on halt until further notice. The US-based company suspended all shipping to and from Ukraine last week.
-
The war in Ukraine and the ensuing sanctions against Russia could harm Europe's energy supplies and stall its economic growth, European Commissioner for Economy Paolo Gentiloni warned on Wednesday. Europe may encounter problems in the supply of energy resources - more precisely, the supply of Russian gas - and needs to be ready for such an outcome. He said:
"Russia's invasion of Ukraine will likely impact growth negatively, including through repercussions on financial markets, further energy price pressures, more persistent supply chain bottlenecks, and confidence effects that we should not under-evaluate."
EU's statistical office, Eurostat, reported on Wednesday that inflation within the bloc had soared to a new high of 5.8% in February.
-
European natural gas prices spiked above $2,200 per 1,000 cubic meters on Wednesday for the first time in market history. The escalating crisis between Russia and Ukraine has raised fears of supply shortages.
The April futures at the TTF hub in the Netherlands soared from around $1,500 to $2,226 per 1,000 cubic meters, or $213 per megawatt-hour in household terms by 09:30 GMT, hitting an all-time high, data from the London ICE exchange shows.
A huge increase in applications is raising the price by the minute, Kaushal Ramesh, senior analyst at Rystad Energy, told Vesti. He said it had also been affected by fears of supply outages due to possible damage to infrastructure in Ukraine, through which the majority of Russian gas is delivered to Europe, and the possibility of supply restrictions on Russian oil and gas.
Comment: As sweeping financial changes are taking place, Russia will not be the only victim. Knee-jerk decisions impact the EU's global commerce and financial structures as well: