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8.1.7 Ukraine sanctions Russian state owned banks
Ukraine has imposed one-year sanctions on five Russian-owned banks
operating in the country: the Ukrainian subsidiaries of Sberbank (Sberbank Ukraine and VS Bank) and VTB (VTB Bank Ukraine and BM Bank); as well as Prominvestbank, owned by VEB, the Russian development bank.
The sanctions banned financial transactions with the parent bank such as the transfer of funds to the parent, dividend and interest payments, repayment of loans or deposits from correspondent accounts, repayment of subordinated debt, profit distribution, and allocation of capital.
According to the National Bank of Ukraine (NBU), the sanctions are aimed at preventing capital outflows from Ukraine . Only Russian state-owned banks’ subsidiaries were on the target list, as other banks with (indirect) Russian ownership were not sanctioned, such as Alfa-Bank Ukraine and Russian Standard’s Forward Bank.
Renaissance Capital estimates Sberbank and VTB exposure to the Ukrainian risk is rather limited (RUB36-43bn) or about 0.5% of their total assets.
Both banks have built significant provisions either at the subsidiary (VTB) or parent level (Sberbank), therefore total Ukrainian risk amounts to about RUB36bn at VTB (c. 36% of our expected earnings 2017E) and RUB43bn for Sberbank (equivalent to one month of earnings under RAS), according to Rencap.
The CBR also gave state banks a three-year extension to set aside extra provisions needed following the introduction of sanctions by Ukraine.
75 RUSSIA Country Report April 2017 www.intellinews.com