Page 55 - bne IntelliNews Russia OUTLOOK 2025

Western banks announced their intention to withdraw from Russia; however, in practice, only some have fully severed ties with this market.
The US decision will affect Russian gas exports to Europe and Turkey. Since mid-2022, Gazprombank has been designated to handle Gazprom’s gas contracts with EU countries. Now that the bank has been subjected to US sanctions, it is essential to establish new channels to facilitate payments for gas deliveries, which necessitates isolating the entities involved in these transactions from the Western financial system. However, this move would require consent from European partners. Furthermore, the need to establish new settlement mechanisms opens the door to renegotiating existing contracts, and this may lead to reduced purchase volumes and changes in delivery arrangements. The related issues will particularly affect recipients of Russian gas supplied via TurkStream, such as Hungary and Turkey, which are seeking interim solutions to maintain supply stability. Turkey's Energy Minister, Alparslan Bayraktar, has responded to the sanctions by appealing to the US to revise the restrictions imposed on Gazprombank.
As bne IntelliNews reported, US financial sanctions are working better than expected and causing the Kremlin some real headaches and banks faced increasing problems with payments as 2024 wore on.
In total, on November 21, more than 50 Russian banks with international connections, more than 40 securities registrars and 15 individuals fell under US sanctions. Among the banks are Eurofinance Mosnarbank, Dom.RF Bank , BCS Bank, Weibank, Vitabank, Interstate Bank, Uglemetbank, Krona Bank, Finstar Bank and others.
In addition to the sanctions list, the US Treasury Department has issued a special warning for foreign financial institutions and banks using the Russian equivalent of SWIFT – the Financial Messaging System (SPFS). The US will perceive this interaction as a red flag. The use of SPFS facilitates the circumvention of US sanctions by Russian individuals related to or associated with the country's military-industrial complex, as well as those included in the SDN list, the US Treasury Department reported.
Since April 2022, importers of Russian energy resources from Western countries must open two special type "K" accounts in an authorised bank - Gazprombank: a ruble and a foreign currency account. Payment is made by crediting euros or dollars to the foreign currency account. Gazprombank then sells the currency on the Moscow Exchange and credits the received rubles to the ruble account of the foreign buyer. The buyer acquires ownership of the gas only after the rubles are credited to Gazprom's account (also opened in Gazprombank). Sanctions against the Moscow Exchange group in June of this year made transactions with euros and dollars on the exchange market
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