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“It is extremely undesirable that a bank’s branch should not meet the requirements. We will have to temporarily shut down such organizations,” Simanovsky told journalists.
He stressed that such measures have not been taken previously but will be used if necessary.
“I mean that if commitments to depositors and clients, as well as requirements are not fulfilled and certain laws are not complied with, then these branches [of banks] cannot operate as credit institutions,” Simanovsky said.
He said 3-5 Russian banks have already expressed desire to work on the Crimean market. The first deputy Central Bank chairman also said there are certain risks for Russian banks in Crimea and are connected first and foremost with likely Western sanctions.
“In the near future, large Russian banks will appear in Crimea,” Simanovsky said.
The Republic of Crimea and Sevastopol, a city with a special status on the Crimean Peninsula, where most residents are Russian, held a referendum March 16 in which an overwhelming majority of Crimeans voted to secede from Ukraine and join the Russian Federation. The reunification deals with Moscow were signed March 18.
The developments followed a coup in Ukraine in February that occurred after months of anti-government protests, which often turned violent. President Viktor Yanukovich had to leave Ukraine citing security concerns. Crimea’s authorities do not recognize the new self-proclaimed Ukrainian leadership in Kiev. Nor do Russia’s authorities.
In line with the Russian law on the financial system of Crimea and Sevastopol, a transitional period will be in place in the republic until January 1, 2015, during which local banks will be able to continue their operations, which will be regulated by the Russian Central Bank.
If banks decide to continue operating in Crimea after January 1, 2015, they will have to undergo state registration or get permission from the Russian Central Bank.
Depositors of Crimea’s banking system will be included in Russia’s deposit insurance system. The Russian Central Bank will allocate some 60 billion rubles ($1.7 billion) from its 2013 revenues for the purposes.
Three banks with Crimean registration, as well as 11 branches and 1,087 offices of Ukrainian banks operate in Crimea.
Russian President Vladimir Putin and other Russian officials have repeatedly stated that the Crimean referendum was in full conformity with the international law and the UN Charter, and also in line with the precedent set by Kosovo’s secession from Serbia in 2008.
Despite that, Ukraine’s new authorities and the West have denounced the Crimean plebiscite claiming it was illegal, and have refused to recognize Crimea part of Russia.
Western countries even moved further, imposing sanctions on some Russian officials, but Moscow responded tit for tat. The West has threatened Russia with new economic sanctions unless Moscow changes its foreign policy.
In the Soviet Union, Crimea used to be part of Russia until 1954, when it was gifted to Ukraine by Soviet Communist Party leader Nikita Khrushchev.