Home LATEST NEWS EU will not disconnect all Russian banks from SWIFT

EU will not disconnect all Russian banks from SWIFT

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The Official Journal of the EU published on Wednesday specifies that the banks VTB, Bank Otkritie, Novikombank, Promsvyazbank, Rossiya Bank, Sovcombank and VEB will be excluded from the system from March 12 in retaliation for the Russian invasion of Ukraine.

However, the sanction does not target either Sberbank, the country’s leading bank, or Gazprombank, the financial arm of the hydrocarbon giant, through which most of the payments for Russian gas and oil deliveries to the EU pass.

A European official argued that the targeted banks, chosen in close cooperation with London and Washington, are the first concerned by the financing of the war effort from Moscow.

Germany and Italy have been alarmed in recent days that they will no longer be able to pay for their supplies of Russian gas, on which they are very dependent, in the event of blocking access to SWIFT for the Russian banks responsible for these transactions.

We did not go as far as a general banishment of the entire banking system, agreed the European official. It has been found impossible to distinguish in the SWIFT system between payment orders concerning hydrocarbons and otherhe justified.

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Poland, very active in its support for Kiev, had pleaded for a greater number of Russian banks to be targeted by the sanctions, according to diplomatic sources. 300 Russian banks and institutions use SWIFT services.

The SWIFT system is a secure messaging platform that allows operations such as the transit of payment orders or transfers of funds between banks. Excluding banks from it is considered a financial atomic weapon.

SWIFT has around 11,000 members and has no real competitor in the world. China created another network, still small at this stage, European officials say, and despite the existence of a Russian system, dubbed SPFS, SWIFT was still used for around 70% of transactions in Russia itself.

The banks targeted by the sanctions will be able to continue exchanges with foreign banks via other means, in particular by e-mail or fax, but this is slower, less secure and more expensive, in particular for very large amounts.

Promsvyazbank, Rossiya Bank and VEB were already among the list of Russian persons and entities hit with an asset freeze in the EU in the first round of European sanctions decided a week ago, after the recognition of the separatist entities of Donbass .

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Since the annexation of Crimea by Moscow in 2014, the EU had already drastically restricted the access of Russian banks – including Sberbank, VTB, Gazprombank and VEB – to European capital markets.

In total, about 80% of the Russian banking system is targeted in one way or another by EU financial sanctions adopted so far, assured the European official. Several Russian public banks are already subject to sanctions since the annexation of Crimea.

The United States, Great Britain and Canada have also announced in recent days their decision to exclude certain Russian banks from SWIFT, without specifying which ones.

The Official Journal of the EU also endorsed on Wednesday the ban on Europeans participating in projects co-financed by the Russian sovereign wealth fund RDIF and the ban in Europe, with immediate effect, of the Russian media RT and Sputnik, considered as Kremlin relay.

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