‘No Russian financial institution is safe’: US official

Russia’s entire banking sector is at risk if the Kremlin orders another invasion of Ukraine, a US official said on Tuesday, with two of the country’s banks so far under US sanctions.

“No Russian financial institution is safe if this invasion continues,” the official told reporters after the announcement of sanctions against state development bank VEB and PSB, which is linked to the financial sector. defense.

The official, who asked not to be identified, said further attacks on Ukraine could lead to sanctions against major state banks Sberbank and VTB.

Export controls that stop the flow of high-tech components to Russia are also a “key part of our potential sanctions,” the official added, calling the measures “really powerful because we’re talking about a technology essential that Russia needs to diversify its economy.”

US President Joe Biden announced tough new sanctions on Russia on Tuesday for ‘starting’ an invasion of Ukraine, but said there was still time to avoid war, even as Vladimir Putin announced his intention. to send troops beyond Russian borders.

Biden also said he hoped diplomacy would still be available, adding that the United States had no intention of fighting Russia.

The “total blocking sanctions” imposed on VEB and PSB, as well as their subsidiaries, mean that financial institutions will have their foreign assets frozen and they will be prohibited from using the American banking system.

The US Treasury Department said on Tuesday it had imposed additional sanctions on five Russian people with ties to the Kremlin on top of the sanctions announced by Biden.

Among them, Aleksandr Bortnikov, director of the Federal Security Service and permanent member of the Security Council of the Russian Federation, and his son.

Others include Sergei Kiriyenko, the first deputy chief of staff in the presidential office, and his son, and Petr Fradkov, chairman and CEO of Promsvyazbank Public Joint Stock Company (PSB).

Treasury Secretary Janet Yellen said in a statement: “We continue to monitor Russia’s actions and if it further invades Ukraine, the United States will quickly impose expansive economic sanctions that will have a severe and lasting impact. on the Russian economy”.

However, the initial US sanctions covered fewer financial institutions than those in the European Union, omitting the country’s largest and most important bank, and did not separate the country from the SWIFT system used to move money. money in the world.

Biden also did not resort to export controls, which would have cut off Russian companies from key high-tech equipment and software, something some analysts have said is possible.

“Today’s action limits Russia’s ability to fund defense-related contracts and raise new funds to fund its campaign against Ukraine,” the Treasury statement added.

“VEB and PSB are public institutions that play specific roles in supporting Russia’s defense capability and its economy,” he added.

While VEB has a $53 billion asset portfolio serving Russia’s sovereign debt with a loan portfolio of over $20 billion, PSB manages nearly 70% of Russia’s defense contracts and provides banking and personal finance services to Russian military personnel, he noted.

In addition, the sanctions related to five ships belonging to PSB – two container ships, two tankers and a freighter.

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