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SWIFT off Russia sanctions list, state banks likely target -U.S., EU officials -Breaking


© Reuters. View of the Sber logo (Sberbank), at the St. Petersburg International Economic Forum, (SPIEF), in Saint Petersburg (Russia), June 5, 2021. REUTERS/Evgenia Novozhenina

By Andrea Shalal

WASHINGTON (Reuters), – U.S., European and other officials are finalizing a broad package of sanctions if Russia invades Ukraine. This includes major Russian banks and does not ban Russia from SWIFT’s financial system.

Three sources who were familiar with the discussion said that the sanctions include sanctions targeting specific Russian oligarchs and export restrictions on Russian components for weapons and tech sectors.

A U.S. official stated that the Russian banks subject to sanctions might include the state-backed VTB (or Sberbank) which are the biggest financial institutions in Russia.

Although both institutions have been subject to the Treasury Department’s sectoral sanctions following Russia’s annexation of Ukraine, they are not able to raise capital in the United States. However, one sanctions expert said that the Treasury Department would impose more severe sanctions.

These would be supported by wind-down and waiver periods that limit damage to U.S. businesses and allies.

After encountering major objections from European nations, three sources close to the discussions said that Russia was no longer being allowed into the SWIFT financial transactions system.

European lenders have expressed concern that banning Russia from SWIFT would mean that billions of dollars of outstanding loans they have in Russia would not be repaid.

One source said that sanctions against Russian banks could still have significant effects on Russia’s economy and financial sector. VTB and Sberbank’s share prices have been volatile in recent weeks, as investors worry Washington could ban Americans from holding debt or equity in the institutions.

One source said that the goal was to create sanctions that really target Russia while also limiting collateral damage for those who impose them. This would recognize that the sanctions will hit Europe more hard.

U.S. officials said strong progress was made on the sanctions package during meetings with their counterparts in Germany, France and Britain this week.

According to U.S.-European officials, sanctions would be placed in the case of a Russian physical invasion of Ukraine. These allies would be required to further coordinate any sanctions responses that are not a complete military invasion such as a big cyber attack.

One U.S. official who was familiar with the negotiations said that “a lot of issues have been settled.” He also stated, “I wouldn’t say there’s 100% agreement but most of Germany’s concerns have been addressed.”

Olaf Scholz, the German chancellor visiting Washington said Monday that he is aligned to the United States regarding actions against Russia. However, he did not mention Nord Stream 2, the gas pipeline the U.S. promised it would shut down if Russia invades.

Washington stated Friday that Russia has been deploying additional troops in Ukraine. A Russian invasion may be imminent, even before the Winter Olympics.

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