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Russia to soften rules for state banks hit by new Kiev sanctions - source
March 23, 2017 / 9:59 AM / 8 months ago

Russia to soften rules for state banks hit by new Kiev sanctions - source

MOSCOW, March 23 (Reuters) - Russia’s central bank is preparing to give state banks a three-year extension to set aside provisions needed to cover for potential losses after a new round of sanctions by Ukraine, a source close to the central bank told Reuters on Thursday.

Last week, Kiev announced new sanctions on the Ukrainian subsidiaries of Russian state-owned banks, banning the banks from taking money out of Ukraine. The sanctions come into effect from Thursday.

The new sanctions will hit the capital of the banks operating in Ukraine as they will need to set aside provisions to cover for potential losses.

An extension would help the lenders to preserve capital and maintain banks’ financial stability.

The source said the Russian central bank governor had not yet signed the order. The central bank did not immediately reply to a request for a comment.

Five Russian state-owned banks are present in Ukraine with a combined market share of 8.6 percent and liabilities of 36 billion hryvnia ($1.3 billion).

Sberbank, VEB and VTB are among the top 20 largest lenders. Sberbank and VTB have both said they are looking at options to leave Ukraine.

The banks have already been banned from increasing their assets and deposits following a breakdown in relations between Ukraine and Russia in 2014 due to Moscow’s annexation of Crimea and support for pro-Russian separatists. (Reporting by Oksana Kobzeva; additional reporting by Kira Zavyalova; Writing by Katya Golubkova; Editing by Gareth Jones)

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