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Bank of Russia ready to support Russian banks affected by EU sanctions

Russia's Central Bank said on Thursday it was ready to support Russian banks subject to the European Union's sanctions by offering liquidity under existing instruments.

"Banks affected by the EU sanctions are capable of coping with problems on their own. Their foreign currency position is well-balanced. But if there are extra factors of risk, the Bank of Russia is ready to offer liquidity under existing instrument," the press service of the Central Bank said.

The bank of Russia said that banks affected by the sanctions had enough capital and the decision to convert subordinated loans into tier I capital would give them extra financial capacities.

"The Bank of Russia has enough instruments to refinance the banking sector," the press service stressed.

On Thursday the European Union imposed sanctions against Russia's financial sector for 12 months, the Official Journal of the European Union said. Five Russian banks fell under restrictions: Sberbank, VTB, Gazprombank, Vneshekonombank (WEB) and Rosselkhozbank. The European Union said it may revise its sanctions after a three-month period. The European Union residents are prohibited to extend medium-term and long-term financing to these banks. The European Union however excluded subsidiaries of Russian state-owned banks registered in the European Union's territory from sanctions. Three of the above banks, Sberbank, VTB and Gazprombank, have such subsidiaries.

[Source: Itar Tass, Moscow, 31Jul14]

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