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Ex-Finance Minister Kudrin says Kiev sanctions on Russian banks will have boomerang effect

"Such pseudo-patriotic prosecution seriously worsens the financial system of Ukraine," Russia's former finance minister said
Russia’s ex-Finance Minister Alexei Kudrin Sergei Bobylev/TASS
Russia’s ex-Finance Minister Alexei Kudrin
© Sergei Bobylev/TASS

MOSCOW, March 16. /TASS/. Ukraine's sanctions against the subsidiaries of Russian banks will have negative consequences for Ukraine itself and have the boomerang effect, former Finance Minister and Head of the Center for Strategic Research Alexey Kudrin said.

"Russian banks play a significant role in the investment of the financial system of Ukraine, and such pseudo-patriotic prosecution (of subsidiaries of Russian banks - TASS) seriously worsens the financial system of Ukraine. In effect, the boomerang effect will happen," Kudrin said.

He stressed that these actions will keep the image of Ukraine as an unstable country where rights are not protected for a long time and will reduce the flow of investments.

"These are super-expensive steps to the detriment of Ukraine's interests," Kudrin said.

Sanctions against Russian banks

On Thursday, Ukrainian President Pyotr Poroshenko imposed sanctions against five banks with Russian state capital operating in the Ukrainian market, according to the president’s press service.

Sanctions were introduced after the decision of the National Security and Defense Council of Ukraine adopted the day before. Restrictions are introduced for a year against Sberbank, VS Bank, Prominvestbank, VTB Bank and BM Bank.

Sanctions include a ban on withdrawal of funds outside of Ukraine, as well as payment of dividends, interest, return of interbank deposits and loans, funds from correspondent accounts of subordinated debt. The ban also concerns distribution of profits and capital of these five banks. At the same time, restrictions, according to the National Bank of Ukraine, do not prohibit settlements between residents of Ukraine and their counterparties who have accounts in the parent structures.

Currently, Russia’s VTB and Vnesheconombank are selling their Ukrainian assets.

In particular, VEB plans to sell its subsidiary bank in Ukraine - Prominvestbank - in the first half of 2017 and negotiates with the final buyers.

According to VTB CEO Andrey Kostin, BM Bank, a subsidiary of VTB Bank in Ukraine, can be sold in the near future, there are already buyers for this asset.

Sberbank is the only of sanctioned Russian state banks that did not plan to part with its Ukrainian subsidiary. Head of Sberbank Herman Gref repeatedly spoke about this in 2016.