It has been coming for a while now, but the EU has finally started banning Russian banks from the Swift network. With the exception of VTB, the other banks are smaller institutions known for supporting the Putin regime.
A Swift Exit For Russian Banks
Ever since Russia invaded Ukraine, there have been talks of cutting off Russian financial institutions from the Swift messaging network. For those unaware, that will not prevent these banks from completing transactions domestically or internationally. It does mean transactions will need to be routed differently, which may pose some challenges.
The new guidelines affect the following institutions:
- VTB
- VEB
- Otkritie FC
- Novikombank
- Promsvyazbank
- Rossiya Bank
- Sovcombank
For now, there is no word on banning other banks in the country, although that always remains a possibility. The current exclusion will go into effect in the next ten days, allowing Swift time to mitigate possible negative impacts on EU businesses and financial markets.
EU President Ursula von der Leyen adds;
“At the speed of light, the European Union has adopted three waves of heavy sanctions against Russia’s financial system, its high-tech industries and its corrupt elite. This is the largest sanctions package in our Union’s history. Today’s decision to disconnect key Russian banks from the Swift network will send yet another very clear signal to Putin and the Kremlin.”
Sberbank has escaped this ban – for now – yet the institution is no longer active on the European market. Ongoing liquidity shortages forced the bank to withdraw manually. None of these developments will have a crippling effect, but it sends a strong signal to Russian officials and President Putin.