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Ukraine will lose 15% of its financial system after closing Russian banks


Petr Poroshenko has approved the sanctions against «subs» of 5 Russian banks operating in Ukraine. Now they are prohibited to withdraw money in their head office’s favor. Under the limitations that will last 1 year there are subs of Sberbank, VS Bank, Prominvest Bank, VTB Bank and BM Bank. As experts say, both sides will suffer from the limitations. However, it will be more serious for Ukraine. Russian banks insured themselves long time ago and reduced their ukranian assets to $1,3 billion.

The beginning ofthe campaign against Russian banks was led off by the Minister of Home Department of Ukraine Arsen Avakov. Let us remind, that on March,7 he demanded to stop Sberbank operating on the territory of Nezalezhnaya and threatened to introduce sanctions against this Russian credit organization. Such claim was made by Avakov after Sberbank started providing service for the citizens with Donetzk and Luganks Republics passports.

However, these were not just words. A week after, on March, 14 radical groups walled up by cement blocks and showered stones upon subs of several Russian banks. And on March, 16 Petr Poroshenko introduced limitations against subs of 5 credit organizations, which are operating in Ukraine. Besides, Kiev said it would suggest to EU, USA and other countries join the sanctions.

Moscow in its turn said that it’s ready to react to the actions from Kiev if situation requires. According to the press-secretary of Russian President Dmitry Peskov, with such attitude Ukraine will no longer be attractive for international investors. And according to the deputy Minister of Finances of Russia Aleksey Moyseev «banks with Russian capital is the only healthy part of Ukrainian bank system». Besides, as the official said, most likely, «Russian banks have already established corresponding allowances due to the situation in Ukaraine».

MK newspaper asked the experts who will lose from the sanctions.

Oleg Bogdanov, chief analyst of «Teletrade Group»:

«In such political confrontation everyone will lose. However, the losses will be absolutely harsher for Ukraine. In particular, its deposit guarantee system will have to pay off deposit losses, which are now in subs of Russian banks. Enterprises, which opened accounts in our credit organizations, will also suffer. But the most importantly — Ukraine will lose the currency in Russian banks, which was sent to additional capitalization. The question might be $1,6 billion. The thing is that all foreign accounts settles were transferred via Moscow. And in case of nationalization of Russian banks foreign exchange outgoings to Ukraine will be shut off.»

Kirill Yakovenko, analyst at Alor Broker.

«Assets of Russian banks in Ukraine amount to approximately $1,3 billion. But this money can’t be considered lost because it can be withdrawn in favor of third parties, to offshore operations. Ukraine, in this case, might lose several levels of investing rating, the interest of international investors to the country might drop even lower. Retail clients of Russian banks will not be affected by the situation, their money will be safe. But they will no longer have a chance to do some operations, for instance, transfer money to Russia. If Russian banks agree on closing all units in Ukraine, it will mean that Ukraine will lose around 15% of its bank sphere, cut the possibility of interbank lending and stability of the sphere.

Dmitry Lukashov, analyst at IFC Markets:

«Kiev has introduced the sanctions in order to stop Russian banks withdrawing their assets. National Bank of Ukraine, presumably, is planning to get these assets dirt-cheap, because other market players just don’t have what it takes. And those ones who might have the money for example, Citybank or Raiffeisen which also operate in Ukraine, will hardly mess up with this explicit politicized redistribution of the country’s banking system. Meanwhile, since the beginning of fighting for the power in Ukraine, Russian banks, especially the state ones, have been actively reducing their presence in the country and withdrawing assets. As a result now their share doesn’t exceed 10%. Besides, bankruptcy of Russian banks subs is unfavorable for National Bank of Ukraine. Russians who have accounts in Russian banks in Ukraine will not suffer from the situation. The sanctions are being introduced to several subs of Russian state banks, two of which are stable enough to overcome the situation without significant losses.»

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