“Businesses are adapting”: how new US sanctions will affect second-tier bank clients

The new sanctions package will greatly affect the ability to make payments, which is already under constant pressure. This opinion was expressed by RB.RU. founder of the international consulting boutique Bespalov Finance Alexander Bespalov.

According to Bespalov, Russia recently created a system in which second-tier banks that were not subject to sanctions could send ruble payments to conditionally friendly countries.

According to Bespalov, a large number of foreign partners will refuse to work with Russian banks subject to sanctions and there will be even fewer banks that can process payments.

“This will affect customers quite a bit. Once again we will have to change banks and correspondent banks and review collaboration mechanisms with foreign partners. All this will lead to an increase in the prices of payments and an increase in the terms of their realization, which will again affect exports, imports and, in general, any international activity,” Bespalov added.

The new sanctions package raised many questions, especially because of the list of organizations that make up it, says RB.RU Yulia Khandoshko, CEO of the European broker Mind Money (formerly Zerich). For example, restrictions are imposed on banks such as the BFC, whose license has been revoked. Slavia Bank is on the sanctions list, but has never been involved in any problems, including paying sanctions.

“For the Russian financial system as a whole, these measures will probably not be critical. However, for customers, especially those whose payments were made through sanctioned structures, the consequences can be serious,” Khandoshko said.

The expert named three groups of bank clients who will be affected by the sanctions.

• First of all, the sanctions affected BCS Bank clients.
• Secondly, the measures affected registrars and depositaries, including Infinitum. This is a large depository that has actively interacted with European counterparties, which creates problems for settlement chains.
• Third, Gazprombank, through which most export payments were made, including to European partners, was hit hard and the loss of this channel could have tangible consequences for export earnings.

Head of the Analytical Department of Amarkets Artem Deev He noted that the sanctions will not affect the work of banks inside Russia. With cross-border interaction, the situation is more complicated: foreign exchange trading in the over-the-counter market was suspended, BCS Bank warned its clients not to delete the application from their phones, banks that issued cards of the UnionPay payment system are obliged to inform that transactions are carried out with them. Abroad they are no longer available.

The expert noted that the restrictions affecting the most important bank on this list, Gazprombank, do not apply to a number of transactions, in particular diplomatic transactions, the sending of humanitarian aid and the purchase and sale of agricultural products and medicines.

“This measure is aimed at complicating operations related to the sale of energy resources, as well as refusing to work with Russian banks by foreign financial organizations. The restrictions applied to the Financial Message Transmission System (SPFS), in our opinion, are excessive: due to the threat of secondary sanctions, foreign banks refused to use it before,” the expert said.

Bespalov admits that Russian companies will be able to adapt to these sanctions. For example, VTB and Sberbank have long been under sanctions, but they have their own networks of foreign partners who, understanding all the risks, continue to work with them. These banks have direct correspondent accounts and, therefore, retain the possibility of making transfers, the expert added.

“This is a pretty serious blow. Although, of course, not fatal. Experience shows that companies somehow adapt to any sanction,” said the expert.

• On November 21, the US Treasury imposed sanctions against Gazprombank, the state corporation Dom.RF, BKS Bank and other credit institutions. In total, about 100 people and companies were added to the sanctions list.
• Gazprombank, which has been subject to a new package of US financial sanctions, warned its clients about possible problems in the operation of cards from the Chinese payment system Union Pay abroad. According to US Treasury Secretary Janet Yellen, Gazprombank is “a channel for the acquisition of military equipment for Russia” (quote from Reuters).
• Primsotsbank, which was also the target of yesterday’s US sanctions package, also issued a similar warning about a possible disruption to the operation of Union Pay cards abroad.
• BCS Bank applications were no longer available on Google Play and the App Store after the credit institution was subject to US sanctions. The press service of BCS Bank informed RB.RU that, despite the sanctions, all services of the credit institution, branches, applications and Internet banking for legal entities operate normally.