Russian Central Bank May Cap How Much Capital Foreign-Owned Bank Branches Can Hold Abroad

FROM EIR DAILY ALERT

Russian Central Bank May Cap How Much Capital Foreign-Owned Bank Branches Can Hold Abroad

Aug. 24, 2018 (EIRNS)—The Central Bank of the Russian Federation has announced a plan to put a ceiling on the amount of their capital that foreign-owned banks operating in Russia, can hold abroad. Until now, there has been no limit; the new plan, however, would put a limit of 20%. This amounts to capital controls, in an effort to protect the Russian banking system and economy from international speculation, of the sort that is currently driving the value of the ruble down sharply. RT reports that 15 major foreign banks are protesting mightily against the central bank plan, including Goldman Sachs, Citigroup, JPMorgan, Deutsche Bank, and HSBC.

According to RT,

“the Central Bank of Russia proposed the rationing measures in response to fresh anti-Russia sanctions from the U.S. and Europe that could allow foreign lenders to block access to the funds for its units based in Russia, two sources close to the issue told Bloomberg.”

Under the new U.S. sanctions, not only are hundreds of millions of dollars of Russian assets inside the U.S. being frozen, but Russian assets in third countries have begun to be affected. For example, Reuters reported earlier this week that Credit Suisse had frozen some $5 billion in assets linked to Russia as a result of Washington’s sanctions. Credit Suisse engaged in some fancy semantical acrobatics to try to deny that they had “frozen” anything, but their official explanation was far from convincing:

RT explained in other coverage:

“Switzerland has been one of the destinations for money leaving Russia. According to data from the Russian central bank, around $6.2 billion, or 14% of total Russian cross-border outflows, went to Switzerland in 2017.

“Other Swiss banks, including UBS and Julius Baer, told Reuters they also respected international sanctions. The banks, however, declined to say whether they had taken similar asset-freezing operations.”