Putin Touts Russian Proxy for Visa, MasterCard After Sanctions

President Vladimir Putin said Russia must develop its own payments network, with companies that blocked some transactions following U.S. sanctions on Russian individuals and a bank at risk of losing market share.

“This wasn’t our decision,” Putin said at a meeting with lawmakers outside Moscow today, adding that developing a domestic system will take time. “We need to defend our interests. And we’ll do that.”

Visa Inc. and MasterCard Inc. stopped processing cards for Bank Rossiya after the U.S. placed the lender on its sanctions list. SMP Bank, which also had its cards blocked by the two biggest card networks, said March 23 that services would resume soon. SMP Bank’s co-owners Arkady Rotenberg and brother Boris were also hit with sanctions.

The sanctions prohibit U.S. firms or individuals from doing business with Bank Rossiya, the U.S. Treasury said on its website on March 20. Russia’s 17th biggest lender 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.

Putin last week said he would open his personal account in the bank targeted by the U.S. and have his salary payments transfered there.

Bank Rossiya 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.

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