EU kicks 7 Russian banks out of Swift system, but saves country’s biggest

Around 25% of the Russian financial system will be affected by Swift Disconnect | Photo: EFE

The European Union published, on Wednesday (2), the rule for expelling seven Russian banks from the Society for Global Interbank Financial Telecommunications (Swift) following the country’s invasion of Ukraine.

In contrast, Sberbank, Russia’s largest bank, and Gazprombank were not included in the list, as they handle most energy transactions with the bloc.

The list of institutions to be expelled from the system includes Bank Otkritie, Novikombank, Promsvyazbank, Bank Rossiya, Sovcombank, Vnesheconombank (VEB) and VTB, the latter being the second largest in the Russian financial system, according to the Official Journal of the EU.

The Council of the European Union said in a statement that the disconnection – combined with the G7 last weekend – will be effective in ten days and will also apply to any person, entity or body established in Russia and whose rights of property are directly or indirectly more than 50% owned by one of the entities concerned.

In addition, the EU also prohibits in this sanctions package investments in future projects co-financed by the Russian Direct Investment Fund, as well as the sale, supply, transfer or export of euro banknotes to the Russia, including the Russian government and the Central Bank of Russia.

The EU has decided to leave the main Russian bank, Sberbank, and Gazprombank off the sanctioned list so as not to hamper European countries’ gas and oil purchase operations.

“We’d like to disable specific transactions, but Swift doesn’t work that way. You can’t distinguish between different types of transactions, so we had to exclude them from the list,” the sources said, noting that 25% The Russian financial system will be affected by the disconnect with Swift, and that’s not counting VEB, which is a development bank.

Based in Belgium, the Swift system connects approximately 11,000 financial institutions around the world and functions as a platform for communicating financial transactions.

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