Russia says it will not allow foreign banks to exit the market so easily

• Russia’s Deputy Finance Minister said that his country will not allow foreign banks to exit the market easily, according to Reuters.
• He added that Russia’s decision to allow the banks to leave “will depend on the decision to unfreeze Russian assets”.
• Russia imposes punitive measures on companies that exit the Russian market.

Russia is imposing increasing costs on the break-up of companies by foreign banks, and is now demanding that they unfreeze Russian assets if they want to exit the market.

“We have made our position clear, and it still stands – we will be strict in letting foreign banks out, and that will depend on the decision to unfreeze Russian assets,” Alexei Moiseev, Russia’s deputy finance minister, said at a forum on Friday. Reuters reported.

Western countries and their allies have frozen more than $300 billion of the Russian Central Bank’s assets abroad as part of their sanctions against Russia for its invasion of Ukraine in February 2022. It is not clear how many of these Russian assets have been frozen by Western banks.

Moiseev’s comments came as President Vladimir Putin’s regime continues to impose increasingly punitive measures on companies trying to exit the Russian market.

Although 1,000 companies announced that they would voluntarily reduce their operations just two months after the start of the Ukraine war in February 2022, only 535 foreign companies have completely separated from the country. According to an ongoing study From Yale University and last updated Sept. 3.

But not for lack of trying: More than 2,000 companies were seeking approval to exit the Russian market, but progress has been slow due to logistical delays, among other reasons.

Moscow too fees Exiting companies An exit fee of at least 10% of the local business sale value. In addition, the Russian government has begun to require sellers from “unfriendly countries” to donate at least 10% of sales proceeds to the Russian budget from March 2023.

Raiffeisen Bank – the largest Western bank still operating in Russia and is working to sell or spin off its domestic business – said in its statement: Half year report It was released on August 1 that “domestic and international laws and regulations governing the sale of businesses in Russia are subject to constant change.”

Moiseev said at a forum on Friday that there is only one foreign bank applying to sell its assets in Russia, according to Reuters. He did not name the bank, but added that Raiffeisen had not made such a request.

China The four big banks lend billions of dollars to Russia

While Western banks have reduced or are working to reduce their exposure to the Russian market, Chinese banks are trying to fill the void.

According to the Kiev School of Economics, the four largest banks in China — Bank of China, Industrial and Commercial Bank of China, China Construction Bank, and Agricultural Bank of China — more than quadrupled their lending to Russia between February 2022 and March 2023. The Financial Times reported on Monday.

The four big Chinese banks had a combined exposure of $2.2 billion to the Russian banking sector at the start of February 2022. That jumped to nearly $10 billion at the end of March 2023, according to the Financial Times.

Russia’s Finance Ministry, Kiev School of Economics, Bank of China, Industrial and Commercial Bank of China, China Construction Bank and Agricultural Bank of China did not immediately respond to Insider’s requests for comment. Chinese banks declined to comment to the Financial Times.