Page 101 - RusRPTFeb24

There have been difficulties with Turkish banks before, but the situation sharply worsened at the end of December - after the entry into force of the 12th EU sanctions package and mainly after the appearance of an executive decree of the US President, which ordered the introduction of sanctions against banks from third countries that help finance the Russian military-industrial complex and related industries. All Kommersant’s interlocutors say that Turkish banks are breaking off relations with Russian banks under US pressure. The connection between the denial of service and Joe Biden's decree was also confirmed to the newspaper by the Chairman of the Turkish Exporters' Assembly, Mustafa Gültepe.
Biden’s decree has already forced banks in China, Russia’s main foreign trade partner, to tighten inspections of Russian counterparties and begin to sever relations with sanctioned dangerous clients.
As US pressure grows, Turkish business periodically tightens its work with Russian clients, but then finds workarounds. Thus, in March 2023, Turkey suspended the processing of transit declarations for sanctioned goods going to Russia. However, transit was later restored. Istanbul is still interested in fulfilling the role of a commodity and transport hub and developing its own exports, Roman Prokhorov, head of the board of the Financial Innovations association, told Kommersant. In 2023, Turkey took second place after China in terms of the volume of goods imported to Russia. Turkish President Recep Tayyip Erdogan estimated trade turnover between the countries at $62bn.
If the risks for Turkish banks turn out to be too great, settlements with Turkey will have to be carried out through banks in third countries, including the CIS, financial market participants believe. However, the use of “friendly jurisdictions” will increase banks’ transaction costs.
The Bank of Cyprus, the biggest Cypriot bank, closed its representative offices in Moscow and St. Petersburg on Jan. 22, data posted by the Central Bank of Russia revealed.
This is the second and third representative office of a foreign bank that has been closed in Russia since the beginning of 2024. Their total number in the country has decreased to 23.
Representative offices of foreign banks are not independent legal entities and are not authorized to conduct banking operations. They act as separate subdivisions representing the interests of a credit organization.
At the beginning of 2022, 37 foreign credit organizations were registered as accredited representative offices in Russia. After the Russian full-scale invasion of Ukraine, nine were shut down in 2022 and three in 2023. Only one
101 RUSSIA Country Report February 2024 www.intellinews.com