By Alexander Miller, emerging markets consultant – Eurasia Business News, February 24, 2022

Smolenskaya embankment, Moscow, October 2017 –  Photo credit : Swann Collins.

The US Treasury imposed sanctions against the Russian banks Otkritie, Novikombank (the main bank of the state corporation Rostec), and Sovcombank. 

These three financial institutions play significant roles in the Russian economy, holding combined assets worth $80 billion. These designations further restrict the Russian financial services sector and greatly diminish the ability of other critical Russian economic sectors from accessing global markets, attracting investment, and utilizing the U.S. dollar.

Otkritie Bank is an important Russian state-owned credit institution and is Russia’s seventh largest financial institution according to US Treasury. Otkritie was designated pursuant to E.O. 14024 for being owned or controlled by, or for having acted or purported to act for or on behalf of, directly or indirectly, the Government of Russia, and for operating or having operated in the financial services sector of the Russian economy.

In addition, 12 Otkritie subsidiaries were designated today pursuant to Executive Order 14024 for being owned or controlled by, or for having acted or purported to act for or on behalf of, directly or indirectly, Otkritie. The 12 Otkritie subsidiaries designated today include an insurance company, a bank, and other financial services companies in Russia and Cyprus. All entities owned 50 percent or more, directly or indirectly, by Otkritie are subject to blocking under E.O. 14024, even if not identified by OFAC.

“The sanctions will not have a significant impact on the activities of Otkritie Bank and the group companies. We were ready for such a development of events. We have a large reserve of capital, liquidity, cash, including in foreign currency. The bank has all the necessary technological capabilities for an uninterrupted work,” reported a press release of Otkritie Bank.

The announced sanctions will affect the use of Otkritie bank cards abroad – bank.

OJSC Sovcombank (Sovcombank) is the third largest privately owned financial institution in Russia by total assets, and Russia’s ninth largest bank overall. The Russian state identifies Sovcombank as a systemically important Russian financial institution. The bank was designated pursuant to Executive Order 14024 for operating or having operated in the financial services sector of the Russian economy.

In addition, 22 Sovcombank subsidiaries were designated today pursuant to E.O. 14024 for being owned or controlled by, or for having acted or purported to act for or on behalf of, directly or indirectly, Sovcombank. The 22 Sovcombank subsidiaries designated today include a variety of financial services companies in Russia and Cyprus. All entities owned 50 percent or more, directly or indirectly, by Sovcombank are subject to blocking under E.O. 14024, even if not identified by OFAC.

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Joint Stock Commercial Bank Novikombank (Novikombank) is state-owned and among the 50 largest financial institutions in Russia. Novikombank primarily operates in the Russian defense sector and serves as the core financial institution for Russian defense company Rostec, which fully owns the bank. Novikombank was designated pursuant to E.O. 14024 for operating or having operated in the financial services sector of the Russian economy. Prior to today’s action, Novikombank was subject to certain debt-related restrictions pursuant to Directive 3 under E.O. 13662 but is now blocked. Novikombank’s parent company, Rostec, remains subject to certain debt-related restrictions pursuant to Directive 3 under E.O. 13662.

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