The President of the European Commission, Ursula von der Leyen first mentioned this past weekend plans to remove Russian banks from the SWIFT international banking system. This was a consequence of Russia’s invasion of Ukraine. Today the EU formally decided to block seven Russian banks from SWIFT. The banks are:
- VTB Bank PJSC
- Bank Rossiya
- Bank Otkritie
- Promsvyazbank PJSC
- Sovcombank PJSC
A notable exclusion from the list is Sberbank of Russia PJSC, the largest bank in Russia by a wide margin. Sberbank has over $500 billion of assets and over $300 billion of loans on its books, based on its latest filings. The U.S. Treasury also estimated that Sberbank was the most financially significantly bank in Russia, holding what they believe is a third of all bank assets in Russia as well as having the largest share of deposits in the country.
The action by the EU follows action by the United States Treasury on February 24, 2022 to target both Sberbank and VTB, in addition to several other Russian banks and entities. Specifically for Sberbank, the U.S. Treasury imposed a “correspondent and payable-through account sanction” on the bank that will fully be in effect in 30 days. The U.S. Treasury department’s office of foreign asset control (OFAC) is requiring all U.S. financial institutions to close any Sberbank correspondent or payable-through accounts, and to reject any future transactions involving Sberbank. The stated objective is to restrict Sberbank’s ability to transact in U.S. dollars.