West responds to the invasion of Ukraine -sanctions will be imposed on Russia's largest banks
As the West responds to Russia's invasion of Ukraine, sanctions will be imposed on some of Russia's largest lenders.
Sanctions against some of Russia's largest state banks could have "very important systemic effects on Russia," according to a top economist.
Banks like Sberbank, VTB, and Gazprombank are among Russia's largest lenders, but they have escaped sanctions so far. Sberbank controls 32.6 percent of Russia's assets, followed by VTB (16.4%) and Gazprombank (7%).
These banks, according to Elina Ribakova, deputy chief economist at the Institute of International Finance, "facilitate the transactions with Russia for global trade, so foreign partners will have to find new banks that they can work with."
Sanctions against these banks could force global financial institutions to stop doing business with them, with banks refusing to do business with their Russian counterparts unless the authorities give them explicit permission.
Following the invasion, European banks with exposure to the Russian market saw their stock prices plummet this morning. Raiffeisen, an Austrian lender, lost 16.8% of its value, while UniCredit, an Italian lender, lost 8.8%.
The decision to de-Swift Russia is still under consideration, with experts predicting that the move would be harmful to the Russian economy and trading system. Russia would be unable to access international profits from oil and gas exports if it were cut off from the international payments network.
Russian military forces launched an "unprovoked and unjustified attack," according to US President Joe Biden. He promised that the US and its allies and partners would "respond in a united and decisive way," and that "the world will hold Russia accountable."
Today, President Biden is expected to meet with G7 members and announce "further consequences" for Russia.
President Biden said the US and its allies would impose "severe sanctions" on Russia in response to President Putin's "flagrant aggression" after a phone call with Ukrainian President Volodymyr Zelenskyy.
By fLEXI tEAM