Sanctioned Russian banks face international payment issues

A Russian state flag flies over the headquarters of the Central Bank in Moscow, Russia, March 29, 2021. A sign reads: ‘Bank of Russia’. REUTERS/Maxim Shemetov/File Photo

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MOSCOW, Feb 25 (Reuters) – Customers of some Russian banks under Western sanctions will no longer be able to use their cards abroad or with mobile payment systems from Apple and Google, the central bank said on Friday, as it strengthens its support for banks. .

US, European and British leaders have targeted Russian banks with sanctions aimed at punishing Moscow for sending troops to Ukraine, a move that drew global condemnation and sent the ruble crashing to record lows. Read more

The central bank said debit and credit cards from sanctioned banks, which it listed as VTB (VTBR.MM), private lender Sovcombank, Novikombank, Promsvyazbank and Otkritie Bank, would continue to operate in Russia without restrictions.

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“The cards of these banks will not be able to be used with ApplePay and GooglePay services, but standard contact or contactless payment with these cards is fully available throughout Russia,” the central bank said.

The central bank did not mention dominant lender Sberbank , which said late Thursday it was operating normally and considering the implications of the sanctions.

The US Treasury said on Thursday that US banks must sever correspondent banking relationships with Sberbank within 30 days, while Britain said it would impose an asset freeze on all major Russian banks.

Sberbank serves nearly 102 million people in Russia and has a presence in 17 other countries. Russia had 370 banks at the start of 2022.

Addressing the impact of the sanctions, the central bank announced measures to support the banking sector and the ruble to ensure financial stability. The central bank also eased regulatory requirements for the sector and asked banks to consider deferring dividend and executive bonus payments.

Some of the sanctioned banks sought to allay customer fears on Friday by promising the funds were safe.

“The banking community is prepared for different scenarios: we have enough cash to meet demand and there are no restrictions on withdrawing cash from ATMs or branches,” said Sberbank, VTB, Alfa -Bank and Otkritie in a joint statement.

Private lender Alfa-Bank said the sanctions only bar it from issuing shares, which it does not plan to do anyway. Alfa-Bank said it continues to conduct cross-border transactions through the SWIFT global interbank payments system.

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Additional reporting by Elena Fabrichnaya; Written by Alexander Marrow; edited by John O’Donnell

Our standards: The Thomson Reuters Trust Principles.

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Elaine R. Knight