March 21 (Bloomberg) -- OAO Bank Rossiya, the St. Petersburg-based lender targeted by U.S. sanctions, pledged to meet all of its client obligations, even as MasterCard Inc. and Visa Inc. stopped servicing its cards.
The bank, which yesterday became the first financial institution to face sanctions over the Ukrainian crisis, said it is operating in “a stable mode,” according to a statement on its website.
“The leadership of Bank Rossiya will take all necessary legal action to protect the rights and legitimate interests of the bank and its customers,” the bank said in a statement.
The sanctions prohibit U.S. firms or individuals from doing business with Bank Rossiya, the U.S. Treasury said on its website yesterday. 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 close associates of President Vladimir Putin, the Treasury said.
“Bank Rossiya is the personal bank for senior officials of the Russian Federation,” the Treasury said. “Shareholders include members of Putin’s inner circle.”
Putin said today he didn’t previously have an account at the bank, and plans to open one, according to Interfax.
A U.S. official who briefed reporters on condition of anonymity said the individuals won’t have access to any U.S. financial services and will have difficulty conducting transactions in dollars. Bank Rossiya also will be frozen out of dollar transactions.
“This will be a very challenging environment if they can’t access dollars,” said Oleg Kouzmin, chief Russian economist at Renaissance Capital and a former monetary policy adviser at Russia’s central bank. “It’s a big bank by assets but it’s not largely integrated into the financial system in terms of number of corporate accounts or household deposits.”
Russia’s central bank said in a statement Bank Rossiya is fulfilling its obligations and that the regulator may support the bank, its depositors and lenders if needed.
Bank Rossiya said today that U.S. payment-systems operators MasterCard and Visa stopped servicing their cards “without any warning,” according to a statement on its website. Clients can still withdraw cash from its ATMs, it said.
U.S. President Barack Obama announced the action against Bank Rossiya as part of a broadening of sanctions against Russia 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 U.S.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 lender 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, together with partners including billionaire Alexey Mordashov, acquired 50 percent of the wireless operator Tele2 last year.