The European Commission explained the contentious issues of sanctions in the banking sector

Moscow. October 21. Placing long-term deposits in Russian banks, placed under the sectoral sanctions the EU itself is not a violation of the sanctions regime, said in a clarification by the European Commission.

In July and September last year, the EU has imposed restrictions against a number of Russian credit institutions – Sberbank, VTB, VEB, Gazprombank and Rosselkhozbank. In particular, it is prohibited to attract market funding with maturity of over 30 days.

In clarification of a number of practical issues arising from the counterparties of legal entities of the Russian sanctions, the European Commission notes that the Deposit (including for a period longer than 30 days) under the sanctions are not covered. However, it is written in the document if term deposits are only a means to circumvent the ban on long-term financing, it is a violation of the sanctions legislation.

Also not prohibited by the provision placed under sanctions for legal entities, funding from the European export credit agencies provided that the goods for which acquisition funds are not in themselves prohibited to supply to Russia, follows from the explanations of the European Commission.

Another question that is answered by a document – whether deferment of payment for goods or services sanctions for legal entities form of long-term loans prohibited by the sanctions regime. The delay will be considered a violation if they do not correspond to standard business practice and, therefore, can be considered a way to circumvent sanctions. Otherwise it is not a violation, explains the European Commission.

The extension of loans raised prior to the imposition of sanctions, should not violate the 30 day rule, stated in the document.

The holding of funds intended for financing is not included in the sanctions list of legal entities, through under the sanctions of the structure, a violation is not also.

Derivatives fall under the prohibition of providing financing for more than 30 days, but with a few exceptions (cross-currency interest rate swaps, CDS, derivatives used for hedging purposes in the energy market).

The sanctions also prohibit transactions with Depository receipts, the custodian of which is one of the sanctions banks.