A little-noticed provision in the draft law adding sanctions on Russia could hit some of the country’s largest banks, potentially doing more damage than a clause calling for a ban on purchases of sovereign debt that has worried investors, according to Barclays.
“The most drastic version of the sanctions on transactions with Russian banks, in which all of the state banks are sanctioned, would have significant ramifications for the entire Russian economy, which could be even more painful than sovereign debt measures,” said Liza Ermolenko, an economist at Barclays Capital in London.
One provision calls for the US to “prohibit all transactions in all property and interests in property of one or more of the Russian financial institutions”. It lists some of the largest lenders: Sberbank, VTB Bank, Gazprombank, Promsvyazbank, Rosselkhozbank and Vnesheconombank.
The bill was introduced in the US Senate last week by a bipartisan group of legislators, aiming to “impose crushing sanctions and other measures against Putin’s Russia until he ceases and desists meddling in the US electoral process”, said co-sponsor Senator Lindsey Graham. With US President Donald Trump calling for closer ties with Russia, the outlook for passage of the bill remains uncertain. (Bloomberg)