The United States took significant and unprecedented action to respond to Russia’s further invasion of Ukraine by imposing severe economic costs that will have both immediate and long-term effects on the Russian economy and financial system.
The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) imposed expansive economic measures, in partnership with allies and partners, that target the core infrastructure of the Russian financial system — including all of Russia’s largest financial institutions and the ability of state-owned and private entities to raise capital — and further bars Russia from the global financial system.
The actions also target nearly 80% of all banking assets in Russia and will have a deep and long-lasting effect on the Russian economy and financial system.
Treasury is taking action against Russia’s top financial institutions, including sanctioning by far Russia’s two largest banks and almost 90 financial institution subsidiaries around the world.
MAJOR ECONOMIC ACTIONS
Targeting Russia’s Two Largest Financial Institutions
Treasury is taking unprecedented action against Russia’s two largest financial institutions, Public Joint Stock Company Sberbank of Russia (Sberbank)and VTB Bank Public Joint Stock Company (VTB Bank), drastically altering their fundamental ability to operate. On a daily basis, Russian financial institutions conduct about $46 billion worth of foreign exchange transactions globally, 80 percent of which are in U.S. dollars. The vast majority of those transactions will now be disrupted. By cutting off Russia’s two largest banks — which combined make up more than half of the total banking system in Russia by asset value — from processing payments through the U.S. financial system. The Russian financial institutions subject to today’s action can no longer benefit from the remarkable reach, efficiency, and security of the U.S. financial system.
BLOCKING OTHER MAJOR RUSSIAN FINANCIAL INSTITUTIONS
OFAC has also imposed blocking sanctions on three additional major Russian financial institutions: Otkritie, Novikom, and Sovcom. These three financial institutions play significant roles in the Russian economy, holding combined assets worth $80 billion. These designations further restrict the Russian financial services sector and greatly diminish the ability of other critical Russian economic sectors from accessing global markets, attracting investment, and utilizing the U.S. dollar.
Public Joint Stock Company Bank Financial Corporation Otkritie (Otkritie)
Open Joint Stock Company Sovcombank
Joint Stock Commercial Bank Novikombank
DEBT AND EQUITY PROHIBITIONS AGAINST MAJOR STATE-OWNED AND PRIVATE ENTITIES
In a move to limit Russia’s ability to finance its invasion against Ukraine or other priorities of President Putin, OFAC expanded Russia-related debt and equity restrictions to additional key aspects of Russia’s economy. Sberbank is Russia’s largest financial institution. Today,
* Sberbank was also identified as subject to the Russia-related CAPTA Directive.
* Gazprombank Joint Stock Company is Russia’s third-largest financial institution and is closely affiliated with the energy sector.
* Joint Stock Company Russian Agricultural Bank is Russia’s fifth-largest financial institution and closely affiliated with the agricultural sector.
* Public Joint Stock Company Gazprom is the world’s largest natural gas company.
* Public Joint Stock Company Gazprom Neft is one of Russia’s largest oil producers and refiners.
* Public Joint Stock Company Transneft (Transneft) manages Russia’s network of petroleum-related pipelines.
* Public Joint Stock Company Rostelecom is Russia’s largest telecommunications company.
* Public Joint Stock Company RusHydro is a hydroelectricity company and one of Russia’s largest power companies.
* Public Joint Stock Company Alrosa is the world’s largest diamond mining company, responsible for 90 percent of Russia’s diamond mining capacity, which accounts for 28 percent globally.
* Joint Stock Company Sovcomflot is Russia’s largest maritime and freight shipping company.
* Open Joint Stock Company Russian Railways is one of the world’s largest railroad companies.
Pursuant to E.O. 14024, OFAC identified the following three Russian entities for operating or having operated in the financial services sector of the Russian Federation economy:
* Joint Stock Company Alfa-Bank is Russia’s largest privately owned financial institution, and Russia’s fourth-largest financial institution overall.
* Credit Bank of Moscow Public Joint Stock Company is Russia’s largest non-state public bank and Russia’s sixth-largest financial institution.
* Sberbank
Source: home.treasury.gov
