A St Petersburg-based bank has been singled out by Washington as the personal bank for senior Russian officials. As I type this report , Russian capital flight from west to east continues.
Russian President Vladimir Putin said Bank Rossiya had nothing to do with events in Crimea and promised to transfer his wages there.
Furthermore Russian President Vladimir Putin has promised to protect Bank Rossiya President Putin also instructed the Russian central bank to step in, if needed, but the latter said the sanctions on Bank Rossiya did “not have a serious bearing on the lender’s financial stability”.
The bank, which is Russia’s 39th biggest with $5bn in assets, called the actions “illegitimate” because its owners, rather than the bank itself, were the subject of sanctions.
Stocks recovered some ground during the day after Russian President Vladimir Putin moved to restore calm following the introduction of asset freezes and visa bans by the US against high ranking Russian officials.
Russia’s President Vladimir Putin (R) walks with Russian Railways President Vladimir Yakunin (L) during his visit to a recently constructed train station in Sochi (January 4, 2014) Although only banks with connections to high-ranking Russian officials have been targeted, Russian bank shares were broadly lower.
Shares in Sberbank, Russia’s largest bank, closed 1.17% lower – having fallen 2.9% earlier on Friday, while shares in VTB Bank were 2.61% lower after falling 4.3% earlier in the day.
The company is part owned by Gennady Timchenko, a shareholder in Bank Rossiya and one of the wealthy Russian businessmen targeted by Western sanctions.
It’s rather ironic that western sanctions might push Russia to deepen cooperation with BRICS states, in particular, to strengthen its ties with China and India, which will possibly turn out to be a big catastrophe for the US and the EU some time later. The fact is that western economies are in deep shit, and are do not have any real economic power weight behind economic sanctions.
Putin has highlighted that the modern world isn’t unipolar and Russia has strong ties with other states as well, though Russia wants to remain in good relations with its Western partners, especially with the EU due to the volume of deals and joint projects.
In order to modernize the global economic system, at the center of which stand the US and the EU, the leaders of Brazil, Russia, India, China and South Africa have created the BRICS Stock Alliance and are creating their own development bank to finance large infrastructure projects.
While the West seeks to hit Russia hard, it is important to notice that Russia is ready to switch to other markets, for instance BRICS, and increase trade volumes with countries from this bloc.