The “daughters” of Western banks were forbidden to serve strategic enterprise

Working in Russian “daughters” foreign banks addressed the amendment to the bill, which introduces fines of up to RUB 60 million for state-owned enterprises and companies for work with banks, not approved by the government. This was told by a source close to the developers of the project, and confirmed the Federal official. The limitation will apply operations to service accounts and place deposits.

The Finance Ministry proposes to empower the government to ban the work with state-owned enterprises to banks, which formally meets the General requirements (minimum capital, participation in the Deposit insurance system, etc.), but restricted lending to “private enterprises and organizations” from anti-Russian sanctions. The same punishment can be applied to subsidiaries of foreign banks, if the government deems they can apply sanctions against any businesses in Russia. Previously the amendment was published on the portal disclosure regulations ( wrote about it), but the Ministry of Finance to the inquiry about the meaning of the initiative is not answered.

The amendment suggests that working with state-owned enterprises and state-owned companies may be prohibited Russian “daughters” foreign banks, says one of the interlocutors . According to him, the ban could be imposed in cases where the government sees risk of sanctions against the Russian resident banks belonging to foreign banking groups whose parent companies apply sanctions against Russian enterprises and companies in accordance with the legislation of their countries.

Under current law, all Russian units of foreign banks are Russian companies (to establish branches in Russia, foreign banks are prohibited), head of the banks involved in their creation, through the payment of a share in the statutory capital. However, parent banks are able to achieve from its Russian “daughters” adherence to anti-Russian sanctions, the sides agreed .

Formally, the jurisdiction of the EU sanctions and the United States does not apply to subsidiaries of the relevant foreign companies established under Russian law, but it is a grey area of sanctions: potentially prohibited transactions should not be involved in parent companies, and, in addition, the Western headquarters may informally instruct the Russian “daughter” to adhere to the sanctions regime, as if they were American/European legal entities. For example, in November 2014, ZAO Raiffeisenbank has helped Vnesheconombank (located under the sectoral sanctions the EU and the USA) to organize the placement of domestic bonds for 10 billion rubles, and European regulators have checked this deal on the subject of sanctions violations, Bloomberg reported (violations not been found, reported later, the parent company of Raiffeisen Bank International). The Agency wrote that he was aware of two Western European banks, which ordered his “daughter” in Russia to comply with Western sanctions.

According to the Bank of Russia (.pdf) on October 1, 2016 (more recent data on the website of the regulator do not exist) license to conduct banking operations in Russia had 183 credit institutions with participation of nonresidents. The total authorized capital of such organizations exceeded 2.4 trillion rubles., the total amount of foreign investments in their Charter capital was 414,8 billion rubles In 66 banks and four non Bank credit institutions Charter capital was 100% formed at the expense of non-residents. In 26 banks, the share of non-residents exceeds 50%.

Excluded by the government banks will not be able to work with the Federal unitary enterprises and companies included, respectively, in presidential and government lists Federal state unitary enterprises and economic societies having strategic value for defense industry complex and security of the state. Existing lists of such enterprises and companies included state-owned enterprises of the defence industry, organization Manager of the President (in particular, the enterprise for property management abroad), all Russian state media (First channel, VGTRK, TASS, “RIA Novosti”), and the largest state companies — “Gazprom”, “Rosneft”, Russian Railways, Aeroflot, etc. Prohibition to the Bank to work with strategically important state-owned enterprises created in the form of Federal state unitary enterprise, will apply to such Federal state unitary enterprises controlled by the company, to the amendments of the Ministry of Finance.

To assess the scope of the collaboration “daughters” of foreign banks with state-owned companies interviewed Bank representatives found it difficult. According to them, it is obvious that the credit business with the government agencies they have more than business to raise funds (subject to amendment of the Ministry of Finance). “Thus, the prohibition on lending, which is entered, as obviously that would be extremely stupid and would greatly spoil the story of these companies in the global debt market, would be hit harder by the “daughters” of foreign banks, than a ban on raising funds from Russian state institutions,” says a top Manager of one of these “daughters”.

Obviously, the Federal state unitary enterprises are not clientele of the “daughters” of foreign banks, but with large public-owned companies foreign banks in Russia, of course, work with this is not only a certain inflow of liquidity, but Commission earnings in the market Forex, “this will be possible losses,” said the source in one large “daughter” foreign Bank.

the request was sent to the largest “daughters” of foreign banks in Russia: press service of Citibank declined to comment, and ROSBANK (société générale group) and UniCredit Bank have not responded. The representative of the Bank informed that the Bank is actively developing business in Russia, but the initiative of the Ministry of Finance will comment on, when will the final version of the document.

Unofficially, the source of the “daughters” of foreign banks point: the negative effect of the potential restrictions will be not only for them but also for the companies themselves, which will affect the ban on the allocation of funds. In respect of companies, this effect will occur to a much greater extent. It will be more difficult and expensive to conduct foreign exchange operations, cross-border calculations and work in the derivatives market, predict the interlocutors .

A bill to protect the interests of the state when placed in banks of budgetary funds, state enterprises, state corporations and state-owned companies was introduced in the state Duma by the government in July of 2016, in December, adopted in the first reading and preparing for the second. The document gives the government the right to set requirements for banks in which state-owned enterprises and companies will be able to open accounts and hold deposits. The list of banks that meet these requirements, each month will publish the Central Bank. Work with banks, not included in the list of the Central Bank, and SOEs, and the banks themselves will face fines of up to 60 million RUB Their officials will fine for the sum to 1 million rubles. At the same time, the government will be allowed to work with state-owned enterprises and companies banks that do not formally meet their requirements. Such an exception will be made for Russian banks, placed under personal sanctions (for example, the Bank “Russia” SMP Bank included in the sanctions list of the USA), told the deputies and officials of the Ministry of Finance during the first reading of the bill in the Duma. The press service of the Ministry of Finance at the time of publication of this article did not answer.

With the participation of Marina Bozhko, Ivan Tkachev