The U.S. Treasury Department said it would remove sanctions imposed on a former Kazakhstan subsidiary of Russia’s Sberbank because the entity is now wholly owned by a Kazakh company.
The entity, previously called Subsidiary Bank Sberbank of Russia Joint Stock Co., is a commercial bank in Kazakhstan and was sanctioned as a foreign subsidiary of Sberbank last February, after Russia’s invasion of Ukraine. National Managing Holding Co. Baiterek, a company owned by Kazakhstan’s government, on Sept. 1 bought over 99% of the shares in the former Sberbank subsidiary, the Treasury Department said. Baiterek changed the entity’s name to Bereke Bank Joint Stock Co. and replaced its board.
The unusual step made by the U.S. to remove the former subsidiary from the sanctions list highlights the impact of sanctions on Russia as Sberbank was forced to divest itself of some assets. The sanctions delisting will be effective on March 6.
The U.S. imposed sanctions on Sberbank, Russia’s largest bank, in an effort to cripple Russia’s economy, military and elites after Moscow’s Ukraine invasion. The sanctions, part of one of the harshest such packages ever imposed, block all property held by Sberbank and its subsidiaries under U.S. jurisdiction and bar U.S. companies and individuals from doing business with them.
The former Sberbank subsidiary is one of the largest banks in Kazakhstan and is seen as systemically important to Kazakhstan’s financial sector, a Treasury spokesperson said. The Treasury and the State Department worked closely with Kazakhstan’s government to help it with the acquisition and enabled the complex financial transaction, the spokesperson said.
Representatives for Sberbank, Baiterek and Kazakhstan’s embassy in Washington didn’t immediately respond to requests for comment.
The Treasury Department said it received a petition from Baiterek’s chief executive last September to remove the former subsidiary from the sanctions list and decided the former subsidiary no longer met the criteria for sanctions as it wasn’t owned or controlled by Sberbank after the deal closed, according to the Treasury spokesperson.
The Treasury said it also received “reliable assurances” that Bereke Bank wouldn’t knowingly engage in sanctioned activity and that it would release proprietary information to the U.S. congressional leadership and committees if necessary.
The delisting also comes as the war in Ukraine enters into a new phase. Russia is regrouping its forces in eastern Ukraine and launching offensives along five lines of attack, Ukraine’s armed forces said Saturday, as officials in Kyiv and Western capitals continue to warn of a major Russian push to gain territory, The Wall Street Journal reported.
