March 20 (Bloomberg) -- OAO Bank Rossiya, a St. Petersburg-based lender owned by associates of Russian President Vladimir Putin, became the first financial institution to face U.S. sanctions over the Ukrainian crisis.
The measure prohibits U.S. firms or individuals from doing business with Bank Rossiya, the U.S. Treasury said on its website today. The firm has about $10 billion in assets, “numerous relationships” with banks in the U.S. and Europe, and was targeted because its owners are part of Putin’s inner circle, the Treasury said.
“Bank Rossiya is the personal bank for senior officials of the Russian Federation,” the Treasury said. “Bank Rossiya’s shareholders include members of Putin’s inner circle associated with the Ozero Dacha Cooperative, a housing community in which they live.”
U.S. President Barack Obama announced the action as part of a broadening of sanctions against Russia today that targeted 20 individuals, including government officials and allies of Putin. Obama said Russia’s incursion into Ukraine and continuing military movements carry “dangerous risks of escalation” and must be met by unified global opposition.
Bank Rossiya, Russia’s 17th biggest lender, according to the Treasury, was founded in 1990 by Yury Kovalchuk, Vladimir Yakunin and Andrey Fursenko, three associates of Putin who are also on the U.S. sanctions list. Kovalchuk holds about 38 percent of the bank, according to a regulatory filing.
The bank controls OAO Sogaz Insurance Group, one of Russia’s largest insurance companies, and holds a stake in National Media Group, which owns broadcasters and the newspaper Izvestia, according to the bank’s website.
Bank Rossiya also manages the pension fund of state gas company Gazprom, and, together with partners including billionaire Alexey Mordashov, it bought 50 percent of the wireless operator Tele2 last year.
“These sanctions are designed to touch important people close to the Kremlin and have a geopolitical impact rather than a direct effect on earnings at other banks,” said Hadrien de Belle, an analyst at Keefe Bruyette & Woods with a hold recommendation on Russia’s VTB Group and an overweight rating on Sberbank. “This has to be perceived as going after the financial conduits for the wealth of the targets.”
Bank Rossiya’s press service didn’t answer phone calls, and no one answered at the phone number listed on its website.
Bank Rossiya doesn’t have a U.S. branch listed among foreign bank branches on the Federal Reserve’s website. It doesn’t have a U.S. bank subsidiary either, according to data from the Federal Financial Institutions Examination Council.
To contact the editors responsible for this story: Frank Connelly at email@example.com Torrey Clark