VTB Group shares retreated after a newspaper reported the U.S. is threatening “Iran-style sanctions” against Russian lenders if Moscow sends troops into eastern Ukraine.
VTB, Russia’s second biggest bank, slid as much as 4.9 percent and traded 2.1 percent lower at 3.66 kopeks by 4:20 p.m. in Moscow. The wider Micex Index was little changed.
Banking sanctions are one of series of measures the U.S. is considering to isolate Russia economically and diplomatically, the Financial Times reported, citing unidentified congressional aides and officials. Russia’s president Vladimir Putin yesterday said he saw no need to invade Ukraine, while reserving the right to deploy the military to defend ethnic Russians in the region.
“These discussions clearly increase country risk for Russian banks, implying lower attractiveness of equity investment,” Olga Naydenova, a banking analyst at BCS Financial in Moscow, wrote in an e-mailed report. “Such discussions stimulate capital flight, triggering ruble weakness and interest rate spikes, which are negative for banks’ earnings.”
Putin’s troop buildup in Crimea led to the biggest stock selloff in Russian stocks for more than five years on March 3 and pulled the ruble to a record low, prompting the central bank to raise interest rates the most since 1998.
VTB, headed by former diplomat Andrey Kostin, has more than 1,000 employees in its London investment banking unit as well as a presence on Wall Street. It earned 15 percent of its 2012 revenue from outside of Russia compared with 7.3 percent for Sberbank, according to data compiled by Bloomberg.
OAO Sberbank, the nation’s largest lender headed by former economy minister Herman Gref, traded up 0.7 percent at 82.06 rubles, erasing an earlier decline.
VTB and Sberbank’s press services declined to comment on the newspaper report by e-mail.