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Sanctions – yesterday evening’s headlines from EU are the opening salvo


Last night, Bloomberg carried the headline «NO MAJOR RUSSIAN BANKS ON EU SANCTIONS LIST», among others announcing the addition of 8 individuals and 3 entities (Almaz Antey, an air defence systems manufacturer; Dobrolet, Aeroflot’s low-cost subsidiary, which opened flights to Crimea; and RNCB, a Russian bank (# c.183 by assets), which opened branches in Crimea). The headline, however, is misleading, as the Regulations published yesterday (here) only expand the list of persons on Regulation No. 269 (the restrictive measures, i.e. asset freezes and travel restrictions) and amend Regulation No. 692 (the restrictions on imports originating in Crimea). The Regulation introducing the new set of sectoral sanctions is expected later today. Otherwise, over the last 24 hours the chorus of voices suggesting that further sanctions over the Ukrainian crisis be considered has been maintained by British Prime Minister David Cameron in his Q&A with voters, the G7 joint statement expressing «grave concern about Russia’s continued actions», and an unnamed US Treasury official cited by Bloomberg.

Today’s release of the texts of the EU Regulation on sectoral sanctions is the key item to watch in order to assess their scope. Some media reports suggest that the language could still include Sberbank, even though it was passed over by the US OFAC’s action on Tuesday 29 July. The ongoing talk of expanding sanctions further is counterproductive and limits the headroom for any relief bounce, in our view.

Alexei Zabotkin
VTB Capital analyst

USA, EU, Russia

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