Russian banks flee from Crimea fearing Western sanctions

Russian Banks are winding down their activity in the annexed Crimea. Their number has decreased by half over the past two years, and the Bank of Russia has revoked the licenses of the most Crimean banks.

7 September 2016 17:15

The number of Russian banks that arrived to Crimea after the annexation of the peninsula in 2014 has reduced by more than a half. The Russian newspaper Kommersant reports that the Bank of Russia has revoked the licenses of the overwhelming majority of the Crimean banks. Experts say that the number of banks in the region is unlikely to increase.

As of September 1, 2016, the units of 14 banks were operating in the territory of Crimea. The maximum number of 31 credit institutions that had registered subsidiaries in the peninsula, was recorded in December 2014.

The number of Russian representatives dropped by more than half compared to the peak value.

Reportedly, 15 banks which had the structural units in Crimea and Sevastopol had their licenses revoked. The total volume of insurance payments to depositors of these banks registered in the territory of Crimea and Sevastopol, amounted to 3.53 billion. Rubles.

Following the occupation and the illegitimate referendum in March 2014 the Ukrainian banks immediately left Crimea.
In May of the same year, the National Bank of Ukraine has officially banned the Ukrainian banks from working in Crimea. It revoked the licenses of Black Sea Bank of Regions Development and Sevastopol Sea Bank that were initially registered on the territory of Crimea.

Prior to the annexation, 70 Ukrainian representatives were operating at the Peninsula.

“The threat of sanctions for banks operating in Crimea is great and the risk of freezing funds in international settings runs high. The number of regular obligors is extremely small, partially due to the authorities who formed the opinion that the loan would be impossible to pay off. And it is a part of the social pact, associated with the accession of Crimea to Russia,” Kommersant reports.

According to the Deputy Chairman of Lanta-Bank Board Dmitry Shevchenko, the population of Crimea is about 2.5 million people, so a great number of banks is simply not necessary there.

“I think that the State banks like the Russian National Commercial Bank, the Black Sea Bank for Development Reconstruction and the Bank of Russia are quite enough,” he said.

Photo: Internet