Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Russian bank Sberbank was exempted because they handle most of the payments related to gas and oil exports.

Sberbank, Gazprombank exempted as 7 Russian banks banned from SWIFT

As the battle in Ukraine rages, the European Union has made official the list of Russian banks that will be expelled from SWIFT, the high-security system that allows financial transactions and underpins the global economy. Notably, the ban excludes two of the country's biggest institutions, Sberbank and Gazprombank.
The final list targets seven banks considered to have close links with the regime of President Vladimir Putin and are seen as complicit, either directly or indirectly, in financing the war.

Notably, the ban excludes two of the country's biggest institutions, Sberbank and Gazprombank.

The two were exempted because they handle most of the payments related to gas and oil exports, on which the EU heavily depends to produce energy. Around 40% of the gas consumed by the bloc comes from Russia.

It shows that while EU unity has been consistently strong throughout the crisis, it still bumps into limits when faced with the crucial question of energy supplies.

The expelled institutions are VTB Bank, Bank Otkritie, Novikombank, Promsvyazbank, Rossiya Bank and Sovcombank, as well as VEB, Russia's development bank.

The list was unanimously adopted by member states on Wednesday and will enter into force in 10 days to allow both SWIFT and EU business to adapt to the measures.

"Today's decision to disconnect key Russian banks from the SWIFT network will send yet another very clear signal to Putin and the Kremlin," said European Commission President Ursula von der Leyen in a statement.

Since SWIFT is a Belgium-based company and therefore subject to EU law, the sanctions mean the seven banks will be completely prohibited from using the system to send payment messages to any other bank or institution connected to SWIFT anywhere in the world.

Today, SWIFT, which stands for the Society for Worldwide Interbank Financial Telecommunication, links more than 11,000 financial institutions in more than 200 counties and territories. It sends over 42 million messages per day that facilitate domestic and international business deals.

Although the system is by far the leading intermediary for financial transactions, it is not the only one.

Alternatives to SWIFT include China's CIPS, India's SFMS and Russia's SPFS, as well as more rudimentary methods such as tax and phone messages, which are time-consuming and pose security risks.

About 50% of Russia's bank are connected and use SWIFT, while others rely on SPFS and other bilateral instruments.

Member states have spent the last days discussing who to include in the SWIFT blacklist and how to minimize the economic blowback against the bloc.

During negotiations, over half of member states wanted Sberbank and Gazprombank, Russia's first and third largest banks, to be equally expelled from the electronic system but consensus could not be reached as some capitals expressed their concern, Euronews understands.

The selection was made as a matter of compromise and in coordination with the United States and the United Kingdom. The blacklist will be expanded "at short notice" if the situation in Ukraine further deteriorates, the Commission noted.

Speaking on condition of anonymity, a senior EU official explained the SWIFT ban was an all-or-nothing question: the EU cannot ask the system to ban certain financial transactions while sparing others, such as those involving gas exports. The bank is either expelled or allowed inside SWIFT.

This means that, for the time being, member states will be able to continue buying Russian gas without major disruption, unless the Kremlin decides to retaliate by cutting supplies.

An energy cut-off would inflict great pain on European consumers and citizens but also on Russia's own economy: oil and gas account for 60% of Russia's exports, with more than half destined for Europe.

The sector represents a third of the federal budget revenue.

The war is already putting pressure on the gas market: prices are back above the threshold of €100 megawatt per hour at the Dutch Title Transfer Facility, Europe's leading benchmark.

While extremely high, the price-tag does not come off as a surprise for member states, which have been dealing with a persisting power crunch since late summer, well before tensions at the Ukraine border began to ratchet up.

The effects from the SWIFT switch-off will be first felt by Russian banks and their clients. The ruble's value has plummeted to an all-time low, borrowing costs have skyrocketed and the stock market remains closed to avoid a total meltdown.

At the same time, Russian citizens are queuing in front of ATMs in a desperate attempt to retrieve their savings before they are frozen or vanish, as the threat of hyperinflation looms large.

The measures are also expected to hit the EU's economy and trade flows, although the scope of the damage is still unclear and will take more time to materialize.

Russia is the EU's fifth-largest trade partner: in 2020, total trade in goods between the two amounted to €174.3 billion, of which €79 million were EU exports, according to the European Commission.

Exempting the energy payments associated with Sberbank and Gazpromban could help cushion the impact for member states. Figures from 2021 showed the two spared banks had assets worth 37.50 trillion and 7.53 trillion in rubles, respectively.

The blacklisted banks own much less, except for VTB, which is the second largest bank in the country with 18.59 trillion in rubles. Barring VEB, which is a development corporation, the six expelled institutions represent 25% of the Russian banking system, the EU official said.

The SWIFT ban comes on top of a lengthy series of financial sanctions that the EU and its allies have quickly slapped on Russia with the aim of crippling the state's war machine.

Additional measures include, among others, the freezing of foreign reserves owned by the Russian Central Bank, cutting Russian access to the EU's capital markets and a prohibition to provide euro banknotes.

Some of the sanctions will also affect Sberbank and Gazprombank. Put together, the Commission says the measures will target between 70% and 80% of the Russian banking system.
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Altman Says GPT-5 Already Outpaces Him, Warns AI Could Automate 40% of Work
Russian Research Vessel 'Yantar' Tracked Mapping Europe’s Subsea Cables, Raising Security Alarms
Global Cruise Industry Posts Dramatic Comeback with 34.6 Million Passengers in 2024
U.S. Demands Brussels Scrutinize Digital Rules to Prevent Bias Against American Tech
Private Equity’s Fundraising Surge Triggers Concern of European Market Shake-Out
Tokyo’s Jimbōchō Named World’s Coolest Neighbourhood for 2025
European Officials Fear Trump May Shift Blame for Ukraine War onto EU
The Personality Rights Challenge in India’s AI Era
Italy Considers Freezing Retirement Age at 67 to Avert Scheduled Hike
Italian City to Impose Tax on Visiting Dogs Starting in 2026
Study Finds No Safe Level of Alcohol for Dementia Risk
Trump Says Ukraine Can Fully Restore Borders with NATO Backing
Europe Signals Stronger Support for Taiwan at Major Taipei Defence Show
Germany Weighs Excluding France from Key European Fighter Jet Programme
Cyberattack Disrupts Check-in and Boarding Systems at Major European Airports
Björn Borg Breaks Silence: Memoir Reveals Addiction, Shame and Cancer Battle
When Extremism Hijacks Idealism: How the Baader-Meinhof Gang Emerged and Fell
JWST Data Brings TRAPPIST-1e Closer to Earth-Like Habitability
Trump Orders $100,000 Fee on H-1B Visas and Launches ‘Gold Card’ Immigration Pathway
France’s Looming Budget Crisis and Political Fracture Raise Fears of Becoming Europe’s “Sick Man”
Three Russian MiG-31 Jets Breach Estonian Airspace in ‘Unprecedentedly Brazen’ NATO Incident
European manufacturers against ban on polluting cars: "The industry may collapse"
Turkish car manufacturer Togg Enters German Market with 5-Star Electric Sedan and SUV to Challenge European EV Brands
Christian Brueckner Released from German Prison after Serving Unrelated Sentence
World’s Longest Direct Flight China Eastern to Launch 29-Hour Shanghai–Buenos Aires Direct Flight via Auckland in December
New OpenAI Study Finds Majority of ChatGPT Use Is Personal, Not Professional
The conservative right spreads westward: a huge achievement for 'Alternative for Germany' in local elections
Pope Leo Warns of Societal Crisis Over Mega-CEO Pay, Citing Tesla’s Proposed Trillion-Dollar Package
Poland Green-Lights NATO Deployment in Response to Major Russian Drone Incursion
U.S. and China Agree on Framework to Shift TikTok to American Ownership
Le Pen Tightens the Pressure on Macron as France Edges Toward Political Breakdown
Czech Republic signs €1.34 billion contract for Leopard 2A8 main battle tanks with delivery from 2028
Penske Media Sues Google Over “AI Overviews,” Claiming It Uses Journalism Without Consent and Destroys Traffic
Indian Student Engineers Propose “Project REBIRTH” to Protect Aircraft from Crashes Using AI, Airbags and Smart Materials
One in Three Europeans Now Uses TikTok, According to the Chinese Tech Giant
Could AI Nursing Robots Help Healthcare Staffing Shortages?
NATO Deploys ‘Eastern Sentry’ After Russian Drones Violate Polish Airspace
The New Life of Novak Djokovic
German police raid AfD lawmaker’s offices in inquiry over Chinese payments
Volkswagen launches aggressive strategy to fend off Chinese challenge in Europe’s EV market
France Erupts in Mass ‘Block Everything’ Protests on New PM’s First Day
Poland Shoots Down Russian Drones in Airspace Violation During Ukraine Attack
Apple Introduces Ultra-Thin iPhone Air, Enhanced 17 Series and New Health-Focused Wearables
Macron Appoints Sébastien Lecornu as Prime Minister Amid Budget Crisis and Political Turmoil
Vatican hosts first Catholic LGBTQ pilgrimage
Apple Unveils iPhone 17 Series, iPhone Air, Apple Watch 11 and More at 'Awe Dropping' Event
France joins Eurozone’s ‘periphery’ as turmoil deepens, say investors
France Faces New Political Crisis, again, as Prime Minister Bayrou Pushed Out
Nayib Bukele Points Out Belgian Hypocrisy as Brussels Considers Sending Army into the Streets
France, at an Impasse, Heads Toward Another Government Collapse
×