Russian state banks leaving Ukraine because of sanctions, attacks by nationalists

Since Russia launched its war against Ukraine in 2014, seizing the Crimean peninsula and part of the eastern Donbas, Russian banks and other businesses have been under pressure.

They have faced regulatory restrictions and harassment by nationalist groups. Last year, the three largest Russian state-owned banks signaled their desire to leave the Ukrainian market.

On Feb. 18, activists of the Ukrainian nationalist movement of Mykola Kokhanivsky stormed the offices of Sberbank and Alfa Bank in Kyiv’s downtown district of Podil. They broke windows and covered walls with graffiti such as “Death to Russia.” A few days before the incident in Kyiv, unidentified persons set fire to Sberbank branches in Lviv and Khmelnytsky.

Besides banks, the attackers stormed the building of the Russian center for culture and science (Rossotrudnichestvo) in Kyiv. Russian Ministry of Foreign Affairs condemned the attacks and on Feb. 19 summoned Ukraine’s charge d’affairs in Moscow Ruslan Nymchynsky to declare a protest against “continuing outrages of Ukrainian nationalist Russophobes” and blame Ukrainian authorities for inaction.

“It is another instance of aggressive nationalism of neo-Nazi dogma that is gathering momentum in Ukraine and obviously enjoys support of official authorities of the country,” the foreign ministry’s statement read.

Following the weekend attacks, the Kyiv office of another Russian state bank, VTB, on Taras Shevchenko Boulevard has increased security.

The attacks are already adding to the woes of Russian businesses, seen as representatives of the now-enemy nation.

In 2017, Ukraine imposed sanctions for one year against five Russian state-owned banks operating in Ukraine: Sberbank, VTB, BM Bank, Prominvestbank and VS Bank. The National Bank of Ukraine estimated their cumulative liabilities before Ukrainian clients at Hr 36 billion. They have been prohibited to carry any bank arrangements in favor of their parent banks.

Another Russian private bank, Alfa Bank, was not sanctioned.

Sberbank, the largest state-owned bank in Russia, was reported to be waiting for approval from the National Bank of Ukraine to sell its Ukrainian subsidiary. Media named Ukrainian businessman Valery Khoroshkovskyy as a potential buyer.

“Everything is prepared on our side. The question is whether we will be given a permission to sell or not by Ukrainian authorities,” Sberbank chairman Herman Gref said on the sidelines of the World Economic Forum held in Davos in the end of January, as quoted by Russian news agency RIA Novosti.

In 2017, Sberbank sold its another subsidiary VS Bank to Ukrainian banker, former PrivatBank chairman Sergiy Tigipko.

VTB, the second largest Russian state-owned bank, also announced it would close most of its offices in Ukraine until summer, RIA Novosti reported on Feb. 16 citing VTB chairman Andrey Kostin.

“By summer we will close our business in Ukraine almost completely, leaving only one or two offices in Kyiv,” Kostin reportedly said on the sidelines of the Russian Investment Forum in Sochi. “We are now closing branches around the country and settle with all depositors.”

Kateryna Petrova, public relations manager of VTB Ukraine, told the Kyiv Post on Feb. 20 that since the beginning of 2018, the bank has already closed 19 branches around Ukraine. At the moment, there are only nine offices left in Kyiv, Dnipro, Kharkiv, and Zaporizhzhya.

A subsidiary of VTB, BM Bank, has been put up on sale and continues to shrink its regional network. According to bank’s latest statement, it closed its branches in western and eastern oblasts and Odesa.

At the same Russian Investment Forum in Sochi on Feb. 15 chairman of Vnesheconombank Sergey Gorkov said they hoped to sell a Ukrainian subsidiary, Prominvestbank, by May this year. He added that they are also waiting the decision of the NBU.