The new set of the EU’s sanctions, which should take force on August 1, also stipulates to cap access of Russian financial institutions, in which the government holds over 50% + 1 share, to the European capital market. Such financial institutions numbered 15 among Russian Top 100 banks by assets, analysts at Banki.ru tallied.
They are, in particular, Sberbank, VTB Bank, Gazprombank, VTB 24, the Bank of Moscow, Rosselkhozbank, Svyaz-Bank, Bank Globex, Novicombank, Absolut Bank, SME Bank, Rossiysky Capital, Russian Regional Development Bank, Surgutneftegazbank and Eurofinance Mosnarbank.
Analysts made reservation that it is difficult to clearly classify some banks as government-controlled using the EU’s definition as it lacks accurateness. For example, the government holds no 50% + 1 share stakes in Gazprombank, Surgutneftegazbank, Eurofinance Mornarbank, but they are owned by government-friendly entities or individuals (the so-called Putin’s inner circle).
“With regard to such banks there is no full disclosed information about who owns what or diverse schemes of crossholding, nominal holding or trust management are applied," the analytical service explained difficulties of classification.
Meanwhile, Vyacheslav Putilovsky, head of the news & analytical department at Banki.ru, thinks that nobody hinders the government to reduce its stakes at separate banks (especially in those dealing with defense and power utilities programs) by re-registering some of its securities in favor of ‘close’ individuals or a company or by formally assigning the stakes to third parties for management.
The ban on direct long-term loans on the European and US capital markets, of course, is an unpleasant restriction, the expert noted. “But this, however, gives to a certain extent a chance for the development of private banks and subsidiaries of foreign banks. They have not so far been prohibited from raising funds on these markets. And upon borrowing they could be able to give the money to state-run banks (through credits and securities purchases)," Putilovsky argued.
There is also the possibility of a supervised movement of major borrowers of state-run banks to said private banks which enjoy access to the cheap long-term money on the West, the analyst mentioned another alternative, admitting, however, that “such fund-raising schemes could, definitely, result in responses and deepen sanctions”.
At the same time, the role of the Bank of Russia is growing, Putilovsky specified. “The money which was previously invested in European and US securities could be allocated to fund the banking system itself and, in the first place, state-run banks. This has already been promised through CBR’s support," he noted.
