ECB warns EU banks about risks in case of sanctions against Russia | News from Germany about Europe

The European Central Bank (ECB) has warned financial institutions in Europe with a large stake in Russia to prepare for the possible imposition of international sanctions in the event of Russia’s invasion of Ukraine, London-based The Financial Times (FT) newspaper reported on Thursday, January 27, citing informed sources.

According to the interlocutors of the publication, the regulator asked banks for information on how they can respond to sanctions against Russia, including the disconnection of Russian credit institutions from the SWIFT interbank transfer system. The ECB, the sources said, wants to make sure that European banks can comply with any sanctions regime and will be able to quickly terminate relationships with those blacklisted customers.

According to the FT, the ECB requested information from a number of banks with significant financial participation in Russia and Ukraine, including the German Deutsche Bank, the Dutch ING, the American Citi, the French Societe Generale, the Austrian Raiffeisen and the Italian UniCredit.

Risks of financial participation

According to the Bank for International Settlements, international banks, including their Russian subsidiaries, have financial liabilities of Russian-based companies totaling $121 billion, and Russian companies have deposits with international banks totaling $128 billion. The greatest risks threaten the French Societe Generale with a financial participation in Russia in the amount of $2.6 billion.

Against the backdrop of the pulling of Russian troops to the border with Ukraine, the United States and the European Union threatened Russia with unprecedented sanctions in the event that Russian troops invade Ukrainian territory. One of the most drastic punitive measures could be to cut Russia off from Swift, but Western experts and politicians warn that this could have a negative impact on Western countries as well.

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Author: Irina Filatova, Vitaly Kropman