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How Banks Work Under Sanctions And What Will Change For Clients Of Sberbank, PSB, Tochka, And Others -Details

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Banks discussed whether they would limit Apple Pay and Google Pay, whether it is possible to withdraw and transfer currency, and how to make a payment under a currency contract urgently.

On February 24, against the backdrop of Russia’s military actions in Ukraine, US President Joe Biden announced new sanctions against Russia.

  • VTB, Otkritie, Sovcombank, Novikombank, and Promsvyazbank (PSB) fell under blocking sanctions – they will stop all assets in the United States and be prohibited from cooperating with them American counterparties.
  • “Sberu” will close correspondent accounts in the United States until March 26 and will reject all of its transactions but will not freeze the bank’s funds. Unlike the banks listed above, Sberbank will be able to make other transactions with American companies, such as acquiring licenses for American software.
  • Other large Russian banks and companies were subject to restrictions on raising capital and “other transactions with new debt with a maturity of more than 14 days and new shares.” Gazprombank, Rosselkhozbank, Alfa-Bank, Moscow Credit Bank, Gazprom, Gazpromneft, Transneft, Rostelecom, RusHydro, Alrosa, Sovcomflot “and Russian Railways.

In February, the Russian government said it had accumulated enough foreign currency to pay depositors in sanctions against Russian banks. As follows from the materials of the Central Bank, as of December 1, 2018, the regulator and Russian banks kept cash reserves in foreign currency for the equivalent of $44 billion.

The banks included in the list made a joint statement and answered questions from customers. You can jump to the desired section from the table of contents:

  • Restrictions for VTB, Sovcombank, Novikombank, PSB and Otkritie .

Restrictions For VTB , Sovcombank , Novikombank , PSB And Otkritie

Pay With Apple Pay And Google Pay

VTB, Sovcombank, Novikombank, Promsvyazbank, and Otkritie cards will be disconnected from Apple Pay and Google Pay.

Otkritie and PSB specify that cards will not work through Samsung Pay either. Since the sanctions for Otkritie and PSB are similar to the restrictions for VTB, Sovcombank, and Novikombank, the ban on working through Samsung Pay is likely to affect them as well.

Banks explain that contactless payment using plastic cards will work in response to their customers. Some banks also offer, as an alternative, contactless payment with Mir cards based on the MirPay application on Android.

Using Cards Abroad

Customers of these banks will not pay with Visa and Mastercard cards abroad and use them for purchases in online stores registered in the United States and other countries that support sanctions. Online payment may also not work, depending on the territorial affiliation of the correspondent bank, the PSB clarifies.

At the same time, the PSB writes unequivocally that the use of cards abroad is not available. VTB and Otkritie write that payments abroad “may be limited.” “You can try to use the card, but we cannot guarantee the success of the operation,” VTB clarifies. Novikombank does not rule out that the use of the bank’s plastic cards abroad may be restricted.

PSB also clarifies that the emergency cash service and card transactions will not be available abroad. On the territory of Russia, using cards, as before, all transactions are public in POS terminals and ATMs.

To use money abroad, banks offer:

  • Transfer money to a card/account of another bank in Russia that has not been sanctioned.
  • Withdraw the necessary funds in advance in foreign currency and pay in cash on foreign trips.

Cash Withdrawal In Rubles And Foreign Currency

Withdrawing cash, including foreign currency, from VTB, Otkritie, PSB, and Sovcombank cards in Russia works as usual – at partners’ offices, ATMs, and ATMs. Novikombank did not specify whether it is possible to withdraw currency from its cards but stated that all customer funds in various currencies are available in total.

Despite isolation from the dollar system, the bank “has enough cash, including in foreign currency, to meet the needs of customers,” Otkritie notes.

Withdrawals from ATMs are limited only by standard card limits. To withdraw a large amount, Otkritie recommends ordering it in advance.

Currency Exchange

VTB, Otkritie, and PSB say that the currency exchange is also operating as usual. However, Sovcombank suspended foreign exchange operations; a company representative told vc.ru.

Sovcombank will also suspend the purchase of foreign securities in the Sovcombank Investments application. Buying new Russian securities, as well as selling and withdrawing funds, work as usual.

Translations

  • Transfers in rubles and foreign currencies within VTB and Russia are still available. Currency transfers abroad no longer work either in VTB Online or in bank branches.
  • All transfers within the country also work in Otkritie, but the bank recommends using the services of another bank to transfer money abroad.
  • Sovcombank banned currency transfers in the application and bank branches. In addition, the bank will not make transfers through Western Union and Zolotaya Korona payment systems. Ruble transfers work as usual.
  • Ruble transfers are also available in PSB, but now it is impossible to transfer foreign currency. Also, the bank does not prohibit but recommends not to transfer foreign currency from other banks to PSB accounts.

PSB banned transfers due to possible restrictions on foreign correspondent banks – a third bank may block funds.

Contributions

VTB, Otkritie, PSB, and Sovcombank said that all deposits and savings accounts are safe. They promised to fulfill all their obligations – to accrue and pay interest, as well as to issue funds from accounts.

It will be possible to open and replenish new deposits in VTB, including in foreign currency. However, PSB and Sovcombank will no longer open new foreign currency deposits and savings accounts.

Otkritie Bank did not specify whether it would open new deposits in foreign currency.

Loans

Sovcombank, VTB, and Otkritie will continue to issue loans but did not specify what currency. The PSB noted that new loans in a foreign currency would not be published. Customers must repay existing contracts in rubles – they will be converted at a rate previously agreed with the bank.

Also Read: Russian Banks And Their Restrictions In Business Services

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