Under pressure from Ukrainian activists and Ukraine’s authorities Sberbank, Russia’s biggest bank, is looking for a fast route out of the Ukrainian market, its head said on March 21.
“We’re considering the options for the fastest possible exit from the Ukrainian market,” Sberbank CEO Herman Gref told journalists after a bank supervisory council meeting, several Russian media reported.
He added that the bank was deciding whether to sell its Ukrainian business or simply close it.
On March 15, Ukrainian President Petro Poroshenko approved sanctions against Sberbank and four other Russian banks at the recommendation of Ukraine’s National Security and Defense Council. Apart from Sberbank, the sanctioned Russian banks are Vneshekonombank, BM Bank, Prominvestbank and VS Bank.
The sanctions banned the five banks from taking money out of Ukraine.
Ukraine took the decision to impose sanctions after the Russian banks said they were ready to start servicing the bearers of passports issued by the pseudo-authorities in the parts of Donetsk and Luhansk oblast, where Russian-backed forces have seized control.
Earlier, on Feb. 18, Russian President Vladimir Putin signed a decree to recognize documents, including passports, issued by the separatists.
In response to the Russian banks’ decision to service the separatist-issued documents, activists from the the National Corps Party, a nationalist group affiliated with the Azov volunteer battalion, last week bricked up the frontage of the main office of Sberbank in Kyiv, demanding the bank’s closure.
Later, activists from the Organization of Ukrainian Nationalists volunteer battalion tried to set fire to the entrance door of a branch of Russia’s Alfa-Bank.
Kateryna Rozhkova, the deputy head of the National Bank of Ukraine, said in an interview with Ukraine’s Inter TV channel on March 19 that all of the Russian banks in Ukraine are now in talks on selling their Ukrainian businesses.
Sergey Gorkov, the CEO of Vneshekonombank, said on March 21 that Hungary’s OTP group was interested in purchasing his bank’s Ukrainian network.
Timothy Ash, a London-based analyst with Blueberry Asset Management, wrote: “It is interesting that a couple of years back at the outset of the crisis in Ukraine, when Russian banks had a $20-$25 billion loan book in Ukraine, the assumption was that through these state-owned banks Russia had leverage over Ukraine – if they pulled out, they could cause major macroeconomic and financial instability. However, rapidly that leverage has disappeared as the asset quality of these operations drained away, the deposit base dwindled.
“Russian banks played ball, re-committed capital to keep the lights on – and keys in Russian pockets. But I think they are increasingly recognizing that these operations are just not sustainable. The problem is that giving the keys back, risks the Ukrainian authorities will be very reluctant in the future to register Russian bank entities in Ukraine – further reducing economic/financial links and leverage for Russia over Ukraine.
“Over time, trade, energy, banking links between Russia and Ukraine are eroding – pushing Ukraine even further outside Russia’s orbit – actually the opposite of what I think Russia was hoping to achieve. I guess the only leverage left are political ties/military options. Political ties are also evaporating fast – ties to Moscow are now only a vulnerability for Ukrainian politicians. And I guess with the re-arming/retraining of the Ukrainian military, even military options are narrowing, or at least potential costs of military intervention in Ukraine stepping up quite significantly.”
