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Eastern Europe
March 17, 2017 www.intellinews.com I Page 14
Ukraine takes steps against Russian banks and pro-Russian territories in east
bne IntelliNews
The Ukrainian government on March 15 took steps against Russia and its proxies that are fighting in the east of the country.
Two days after protesters bricked up the entrance to Sberbank offices in Kyiv, Ukraine’s Council
for National Security and Defence on March 15 instructed the country’s central bank and SBU security service to draft sanctions against all Russian banks in which the state owns shares. Ukrainian President Petro Poroshenko enacted those measures the next day.
Moscow immediately responded by saying the actions towards the banks had already destroyed the investment climate in Ukraine, and demanded that the Ukrainian authorities protect Russian bank branches from physical attack.
The move follows a controversy over the decision last month by Sberbank, Russia’s largest state- controlled lender, to adhere to government in- structions and recognise IDs issued by separatist authorities in the breakaway eastern Ukrainian regions of Donetsk and Luhansk.
Even though Sberbank’s Ukrainian subsidiary stressed that it will not recognise documents is- sued by the rebel authorities, the lender’s decision triggered a wave of protests in Ukraine, which has seen its relations with Russia break down since the seizure of Crimea in 2014 and the start of the pro-Moscow rebellion in the east.
The proposed sanctions will affect Sberbank, Prominvestbank, VTB, BM Bank and VS Bank,
Ukrainian President Petro Poroshenko with Prime Minister Volodymyr Groysman.
which have a combined share of 8.6% in the Ukrainian market, officials in Kyiv said. Under the measures, the lenders will be banned from trans- ferring money out of the country, as well as pay- ment of dividends, interests, return of interbank deposits and loans.
“In order to preserve the financial stability of Ukraine and ensure that banks with Russian capi- tal fully meet their obligations to customers, the NBU proposes imposing sanctions in the form of a ban on withdrawal of capital outside Ukraine,” the deputy governor of the central bank, Yakov Smoliy, said at a press briefing.
Meanwhile, after an unsuccessful attempt to stop by force a blockade of rebel-held territories in Don- bas initiated by Ukrainian far-right nationalists and military veterans, the Ukrainian authorities made a U-turn and on March 15 ordered the imposition of an official trade blockade of the region.
The move, announced after a meeting of secu-
rity chiefs in Kyiv, marks a sudden turnaround in policy after the government’s initial attempt to end the unofficial blockade by government law enforcers a day earlier merely resulted in the swift release of dozens of detained protesters.
President Poroshenko proposed to Ukraine's National Security and Defence Council the suspension of transport communications with rebel-held areas in the eastern Donbas region. “It [the official blockade] will be in effect until the occupiers return the stolen Ukrainian enterprises to the jurisdiction of Ukraine,” Poroshenko said.