EU: Swift ban of seven Russian banks in effect

Created: 03/02/2022Updated: 03/02/2022 12:55 p.m

The headquarters of VTB Bank in Moscow.

© Christian Charisius/dpa

The exclusion of Russian banks from the Swift communication system is considered one of the harshest sanctions.

The sanction is now in effect.

Which financial institutions are affected?

BRUSSELS - The EU has put into effect its sanctions banning seven Russian financial institutions from the Swift banking communications network.

A transitional period of ten days applies.

Among other things, the second largest bank in Russia VTB is affected, according to the EU Official Journal published on Wednesday.

The Swift ban is one of the harshest punitive measures taken by the European Union since the start of Russia's war against Ukraine.

The fundamental decision on this was made on Sunday night together with allies such as the USA, Canada, Italy and Great Britain.

According to the federal government, the financial institutions are to be cut off from international financial flows, which will massively restrict their global activities.

EU Commission chief Ursula von der Leyen said at the weekend that, in view of the Russian attack on Ukraine, they were more determined than ever to "impose a high price on Russia for this aggression and to further isolate the country from the international financial system and economically".

In addition to VTB Bank, six other institutes are to be excluded from Swift.

These are Bank Otkritie, Novikombank, State Bank Promsvyazbank, Bank Rossiya, Sovcombank and State Bank VEB.

The largest Russian bank Sberbank and Gazprombank are not affected.

A high-ranking EU official justified this on Wednesday with the fact that some EU countries are particularly dependent on energy supplies from Russia - including Germany.

Sberbank and Gazprombank are the main banks for payment of energy supplies.

It is not possible to exempt certain transactions from a Swift exclusion.

According to the official, the ten-day period should make the transition easier for domestic banks.

More than 80 percent of Russian banks affected

He also stressed that the EU has already imposed other sanctions on Sberbank and Gazprombank.

According to him, more than 80 percent of Russian banks are now affected by EU sanctions.

In addition to the Swift ban, the new sanctions package also includes a ban on investors in the EU from participating in projects of the Russian Direct Investment Fund.

It also includes a ban on the delivery of euro banknotes to Russia.

The background is that some banks have at least considered the possibility of physically transporting banknotes, it said.

more on the subject

Russian central bank raises key interest rate - ruble collapses

War in Ukraine: Swift sanction - "The toughest weapon we have"

EU will exclude seven Russian banks from Swift

Swift provides the infrastructure that allows financial institutions to securely communicate with each other when transferring funds across national borders.

Exclusion means that those affected are effectively cut off from the global financial system.

According to Swift, more than 11,000 participants in more than 200 countries use the service – mainly banks, but also investment firms and large corporations.

The USA and the EU have already enacted sanctions against the Russian central bank, among other things.

Transactions with the central bank have been banned since Monday night and all of the central bank's assets in the EU have been frozen.

According to Finance Minister Christian Lindner, the measure is already having an effect: “The ruble is in free fall.

Vladimir Putin's war chest has been hit hard," said the FDP politician on Tuesday.

"This measure has less impact on us, but maximum impact on Russia." dpa