OREANDA-NEWS. In pursuance of the decision of the National Security and Defense Council of Ukraine, the National Bank of Ukraine proposes to impose sanctions against Ukrainian Banks with Russian state capital.

As proposed by the NBU, the National Security and Defense Council of Ukraine will issue a decision to impose sanctions against the following banks:

- SBERBANK PJSC;

- VTB BANK PJSC;

- PROMINVESTBANK PJSC;

- BM BANK PJSC; and

- VS BANK PJSC.

"The sanctions aim to protect the interests of these banks’ customers and prevent the outflow of capital from Ukraine. These sanctions will prevent Ukrainian banks with Russian state capital to siphon off funds abroad and transfer them to parent banks based in the Russian Federation," underlined First NBU Deputy Governor Mr Yakiv Smolii.

The sanctions banning capital outflows are by provided for by paragraph 4 Article 4 of the Law of Ukraine On Sanctions.

The sanctions prohibit any financial transactions involving the transfer of funds to parent banks, including a ban on:

- asset-related transactions that are carried out directly or indirectly (the provision of interbank loans, deposits, subordinated debt, securities purchases, depositing funds in correspondent accounts, etc.);

- dividend and interest payments, repayment of interbank loans/deposits, withdrawal of funds from correspondent accounts, and repayment of subordinated debt;

- profit distribution; and

- allocation of capital.

However, the aforementioned sanctions will not affect settlements between residents and their foreign counterparties that hold accounts in the parent banks and will not prevent Ukrainian banks from meeting their obligations to their customers and bank depositors.

Currently, the Russian state banks' subsidiaries operating in Ukraine targeted by sanctions have sufficient liquidity to meet their obligations to depositors.

As a side note, some restrictions have already been imposed on the Ukrainian banks with Russian state capital. In particular, these banks are banned from raising funds from state-owned enterprises and alienating assets without the approval of the NBU. The regulator has also imposed restrictions limiting their ability to raise household deposits. Moreover, since 2014, the Ukrainian banks with Russian state capital have been placed under the NBU curatorship.

For reference

- Sberbank of Russia PJSC (Russian Federation) has a subsidiary, SBERBANK PJSC, operating in Ukraine;

- Sberbank Europe AG (Austria) has a subsidiary, VS BANK PJSC;

- Bank VTB PJSC (Russian Federation) owns two subsidiaries incorporated in Ukraine - VTB BANK PJSC and BM BANK PJSC;

- State Corporation Bank for Development and Foreign Economic Affairs (Russian Federation) owns PROMINVESTBANK PJSC.