20 Nov 2023 15:14

Foreign banks blocking Avtovaz payments owing to inclusion in SDN List - company head

MOSCOW. Nov 20 (Interfax) - The tightening of the sanctions regime after the inclusion of Avtovaz in the United States' sanctions lists in September of this year has led to the blocking of payments to the company from foreign banks of both unfriendly and friendly countries, JSC Avtovaz President Maxim Sokolov said on Monday at parliamentary hearings in Russia's Federation Council.

"The consequences of this have been newly massive refusals from foreign suppliers, sub-suppliers, financial institutions, and banks to collaborate with our automobile industry. Thus, foreign banks are simply blocking both our outgoing payments and incoming to Avtovaz, as far as export products are concerned," Sokolov said, commenting on the company's inclusion in the SDN list.

"This unfortunately comes from everywhere, and not only from unfriendly destinations, but also accounting for the risk of secondary sanctions from practically all foreign banks," Sokolov added.

Last week, Sokolov told reporters on the sidelines of the Transport of Russia 2023 exhibition that the September inclusion of AvtoVAZ in US sanctions lists has forced the company to adjust its previously announced plans to produce 400,000 cars this year. Actual production volume is now planned to be down approximately 10%.

"We will get approximately to the target figures we talked about a year ago, but under completely different circumstances. This will be slightly less than 400,000 cars; the adjustment will be within 10% for obvious reasons; because of sanctions. As soon as it became obvious "that we were included in the SDN List, it became clear that making use of some supply chains would be difficult and, of course, this figure will be adjusted in these conditions," Sokolov said.

He noted that when the company was included in the US Treasury sanctions list, in fact, "there was a repeated failure of logistics, financial chains and much, much more." "It was such a serious, and not just a blank shot at the economy and at, so to speak, our enterprise. However, we withstood it, no matter what. We have not reduced the productivity of our conveyors, and we are moving at the same speed. We have not changed the so-called film [the sequence of production of different versions of car models], on which our work is based in order to slightly reduce productivity," Sokolov told reporters last week.

Assessing the impact of sanctions restrictions in recent months, Sokolov said that compared to the adaptation period of early 2022, it is perceived as limited. "If last year, during the first, second, and third packages of sanctions, AvtoVAZ came to a standstill across all production lines and sites, now we have slightly, without reducing productivity, suspended the pace of production during the second shift for Vesta. In addition, we stopped working on Saturdays and Sundays "All other shifts are working at full capacity and with the same productivity," the Avtovaz CEO said.

According to AvtoVAZ, in January-October 2023 the company produced 293,000 cars. Sales of Lada vehicles in Russia in the same period, as reported, reached nearly 283,500 units, which is almost double the figure for the same period last year.