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Western sanctions make international payments from Russia slow

August 26, 2014, 16:08 UTC+3 MOSCOW
The currency position will get even worse if the crisis escalates
1 pages in this article
© ITAR-TASS/Stanislav Krasilnikov

MOSCOW, August 26. /ITAR-TASS/. Sanctions against Russian banks have led to a slowdown in processing international payments from the country, Promsvyazbank Vice President Vladislav Khokhlov said in a news conference Tuesday.

“Payments have become slow. Most Western banks process currency payments manually, especially payments from the sanctioned banks. It has decreased the speed of currency turnover in the system and forced banks to keep larger balances of accounts to simply provide settlements,” Khokhlov said.

Khokhlov said that the ban on bond purchases also hit banks.

“It will be difficult to raise funds on the capital market, but there are exceptions, and there are companies who successfully offer bonds even in such conditions,” he said, adding that the currency position will get even worse if the crisis escalates, but the bank has been taking steps to protect itself from the risks since March.

In July, the US extended its sanctions against Russia, banning several companies and state-owned banks from taking long-and mid-term loans within country and prohibiting its companies from purchasing new bonds and shares of the sanctioned organizations. Later the EU imposed similar restrictions on several country’s state-owned banks.

Promsvyazbank has registered an increase in the number of clients since the sanctions were imposed on the state- controlled banks, as some clients transferred their funds to the private bank. The central bank’s tough policy against small and medium banks and the possibility of reverse sanctions against affiliates of foreign banks in Russia also helped the inflow, Khokhlov said.

In January-June, funds on the clients’ deposits in the bank grew 11% to 543 billion rubles.

Khokhlov also said the bank plans to attract up to US $300 million from its shareholders and from the market this year to increase its capital. The bank planned to raise $700 million in 2014, and the bulk of the sum is already raised in 7-year $300 million subordinated Eurobond placement in June.

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