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Barclays Warns on ‘Drastic’ Proposal to Sanction Russian Banks

  • Provision in U.S. draft law could affect biggest state banks
  • Bill still in early stages, could be amended, Barclays says
Russia's Moscow City Financial District Ahead Of Rates Decision
Photographer: Andrey Rudakov

A little-noticed provision in the draft law adding sanctions on Russia could hit some of the country’s largest banks, potentially doing more damage than a clause calling for a ban on purchases of sovereign debt that has worried investors, according to Barclays.

“The most drastic version of the sanctions on transactions with Russian banks, in which all of the state banks are sanctioned, would have significant ramifications for the entire Russian economy, which could be even more painful than sovereign debt measures,” said Liza Ermolenko, an economist at Barclays Capital in London. “These proposals are currently very broad and would likely need to be clarified further given the potential implications.”