Rewritten article on US sanctions impact on Russian banks and markets

The United States Treasury extended sanctions on November 2, targeting a broad set of Russian entities. The sanctions, part of the SDN list often referred to as the black list, aim to sever access to the dollar system for those named.

The list featured several banks and financial institutions, including Absolute Bank, Home Bank, Pochta Bank, All-Russian Regional Development Bank, Russian Standard Bank, Regional Bank of Russia, and Blank Bank.

In addition to the financial institutions, the measures affected the St. Petersburg Stock Exchange, various Gazprom Neft subsidiaries, Bauman Moscow State Technical University, the Cybernetics and Automation Research Center, the Arctic LNG 2 project, and AFK Sistema.

Experts noted that the sanctions reflecting US policy after a lengthy period were anticipated could include higher scrutiny of certain Russian financial actors. Konstantin Kharchenko, affiliated with the Ministry of Foreign Affairs and the Financial University under the Government of the Russian Federation, remarked that the move was not surprising given the long-running policy framework.

Response from Russian banks

Pochta Bank said the sanctions would not disrupt its operations or affect customers. The institution serves Russia broadly with roughly 25 thousand branches across the country, including distant regions, and stated it would continue to operate normally.

The bank added that customer accounts remained active and funds could be accessed through branches, online banking, and mobile apps, with service available inside the Russian Federation.

Card services, including those from foreign networks, were reported to function in stores and ATMs nationwide, and Pochta Bank confirmed that all service points, ATMs, and bank terminals, along with its mobile application, remained in operation.

Russian Standard also indicated continued normal operation, noting that cards from all payment systems work in Russia and transfers can be made by phone or card number.

RRDB and Blank Bank insisted that sanctions would not disrupt their services in Russia, while Pochta Bank, Russian Standard, and RRDB warned that US restrictions could impede debit card use abroad. They advised customers currently outside Russia to withdraw cash, with refunds on the cash withdrawal fee planned for November 2 and 3, and confirmed that UnionPay cards would still function within Russia.

The Mir payment system was described as active in stores and in some banking networks abroad, ensuring card payments within Russia and select international locations.

Potential risks for bank customers

Maxim Osadchiy, head of analytics at BKF Bank, advised customers of sanctioned banks to update their bank apps to the latest versions, noting the apps could disappear from some app stores soon. Reports indicated that the apps of the listed banks were still available on Google Play and the App Store, with exceptions for the Regional Bank of Russia and RRDB, which lacked a mobile app on certain platforms.

Another consequence of the sanctions involves limits on withdrawing money from banks under restriction. The SDN designation means dollar transactions and access to SWIFT would be prohibited for these entities. Yet, given prior sanctions, many major Russian banks already faced restricted access, and the new measures are unlikely to cause immediate catastrophic outcomes. Analysts highlighted that sizeable institutions had already navigated earlier restrictions.

Three main customer challenges were identified: difficulties using cards abroad, complications in servicing cross-border payments, and tighter controls on foreign exchange operations. These shifts could pressure consumers who rely on international financial tools.

Implications for investors and savers

The St. Petersburg Stock Exchange suspended trading in foreign shares with plans to resume on November 6. U.S. sanctions placed on the exchange were projected not to affect client assets such as stocks, though the platform still reported high turnover from American securities prior to the suspension, underscoring the scale of cross-border activity.

Experts noted that American holdings might need to be sold before a specified deadline, with Russian securities potentially frozen in broker accounts afterward. Dividends on American shares could be declared but unused, and selling the papers could be restricted.

Analysts observed that Russian investors might seek opportunities in American shares at prices below market value, urging caution due to ongoing sanctions. They emphasized that deposits remain protected by state guarantees, and the stock market would adapt to evolving conditions, albeit with expected turbulence as the sanction regime evolves.