The National Bank of Ukraine Proposes to Impose Sanctions against Ukrainian Banks with Russian State Capital

In pursuance of the decision of the National Security and Defense Council of Ukraine, the National Bank of Ukraine develops a mechanism to enact sanctions against some banks, including: SBERBANK PJSC, VTB BANK PJSC, PROMINVESTBANK PJSC, BM BANK PJSC and VS BANK PJSC.

“The sanctions aim to protect the interests of these banks’ customers and prevent the outflow of capital from Ukraine. These sanctions will prevent banks targeted by sanctions from taking funds out of Ukraine and transferring them to parent banks based in the Russian Federation,” underlined First NBU Deputy Governor Mr Yakiv Smolii.

Sanctions in the form of a ban prohibiting funds transfers to banks’ related parties to prevent capital outflows abroad have been imposed pursuant to paragraph 25 of part 1 of Article 4 of the Law of Ukraine On Sanctions.

The sanctions prohibit any financial transactions involving the transfer of funds to banks’ related parties, particularly parent banks, including a ban on:

• asset-related transactions that are carried out directly or indirectly  (the provision of interbank loans,  deposits, subordinated debt, securities purchases, depositing funds in correspondent accounts, etc.);
• dividend and interest payments, repayment of interbank loans/deposits, withdrawal of funds from correspondent accounts, and repayment of subordinated debt;
• profit distribution; and
• allocation of capital.

However, the aforementioned sanctions will not apply to settlements carried out by banks targeted by sanctions when these transactions are initiated by the banks’ customers provided that the execution of these settlements is not in violation of the ban.

Currently, the banks targeted by sanctions are liquid and have sufficient funds to meet their obligations to depositors.

Since 2014, the banks targeted by sanctions have been placed under the curatorship of the NBU.