Central Bank to give banks three-year extension to create provisions for Ukrainian subsidiaries - source
MOSCOW. March 23 (Interfax) - Russia's Central Bank is handling Ukraine's sanctions as an emergency situation and has allowed for a three-year extension for Russian banks to create provisions for their Ukrainian subsidiaries, a source close to the regulator told Interfax.
Ukraine's government introduced sanctions against Ukrainian banks with Russian state capital on March 23. The sanctions ban the banks from carrying out any financial operations that benefit parent companies. The sanctions were placed on subsidiaries of Sberbank (PJSC Sberbank, PJSC VS Bank), Vnesheconombank (Prominvestbank) and VTB (VTB Bank and BM Bank).
"The Bank of Russia considers the decision of Ukraine's government in relation to subsidiaries of Russian banks in Ukraine to be an emergency situation and is preparing a special order on short notice which will allow Russian banks to form provisions for all the losses from their Ukrainian subsidiaries extended by three years," the source said.
Ukrainian banks with Russian capital under government control repeatedly faced different forms of attacks after Crimea joined Russia and war broke out in the Donbass. The situation worsened after Sberbank reported on March 7, 2017 it was ready to provide services individuals with passports issued by the self-proclaimed republics of the Donbass, the DNR and LNR, in accordance with a decree by Russia's president which called for Russian banks to provide the possibility of accepting passports of residents of the Donbass.
According to Moody's ratings agency, at the end of 2016 Sberbank's assets in Ukraine totaled 46% of the overall parent company's assets while VS Bank formed 0.04%. VEB's subsidiary Prominvestbank formed 2% of the parent bank's assets, while VTB's subsidiary BM Bank made up 0.03% and its subsidiary VTB Bank made up 3.3%.