The euro-area units of two Russian lenders targeted by a fresh round of European Union sanctions can maintain access to European Central Bank funding as long as they don’t channel the funds back home.
The subsidiaries of OAO Sberbank and VTB Group continue to have access to ECB funding should they need it, an EU official said today in response to e-mailed questions. Using newly issued shares or bonds of the targeted institutions as collateral for obtaining financing from EU persons or entities is not allowed, the official said on condition of anonymity, citing policy.
The Frankfurt-based ECB has sought clarification on the matter, as it was not clear from the legal text on sanctions issued yesterday whether potential ECB refinancing for Sberbank Europe AG and VTB Bank (Austria) AG would be affected by the sanctions, a person familiar with the issue said, declining to be named as the discussions aren’t public. The sanctions, which limit their parent lenders’ ability to raise money on European financial markets, were imposed in response to President Vladimir Putin’s stance on the Ukraine conflict.
The ECB’s Governing Council, which is independent from EU political decision-making, may also take a view on the matter, the person said.
It’s unlikely the banks would try to obtain ECB financing on behalf of their Russian parent organizations as a way to evade sanctions, the EU official said. Any such attempt would be prohibited, according to the official.
The Russian banks’ two Austrian units are two out of about 120 institutions that will be directly supervised by the Frankfurt-based ECB when it takes up oversight duties for the currency area in November. The ECB’s Governing Council is scheduled to convene for its normal monetary policy meeting in Frankfurt next week.
“The ECB will take all necessary steps to prevent circumvention of the EU restrictive measures in the context of its monetary policy operations,” a central bank spokesperson said.
Royal Bank of Scotland Group Plc, Britain’s largest state-owned lender, as well as Societe Generale SA and Natixis SA, have said they’re cutting lending to Russian companies in response to the sanctions ruling.