Russia's top banks plot temporary sanctions workaround -sources
* Russia prepares for possible new U.S. sanctions on banks
* Earlier U.S. bill proposed cutting banks off from dollars
* New bill does not mention specific banks
* Russian banks may use mutual accounts to move FX - sources
By Darya Korsunskaya, Elena Fabrichnaya and Tatiana Voronova
MOSCOW, March 14 (Reuters) - Leading Russian banks are
working on plans to help each other retain at least short-term
access to the global financial system in the event that they are
hit by fresh U.S. sanctions, sources familiar with the matter
Sberbank, VTB, Gazprombank and others
are examining how they can provide each other with access to
U.S. dollars or other major foreign currencies by using
so-called correspondent accounts, the sources said.
Banks access financial services in different jurisdictions
and provide cross-border payment services to customers in
various currencies through correspondent banking relationships.
The new scheme, which banks started to draft with Russia's
finance ministry and the central bank last year, would be
unlikely to work indefinitely but could help avoid a panic if
one or several big banks are cut off from dollar transactions.
U.S. lawmakers last year drafted a sanctions bill which
proposed cutting off some of Russia's top banks from the U.S.
dollar system, mentioning Sberbank, VTB, Gazprombank, Russian
Agriculture Bank, Promsvyazbank, VEB and Bank of Moscow.
This did not come into force and recently another was
proposed, without mentioning any specific banks.
But Russian banks still fear they could come under sanctions
and so have begun to draft a contingency plan.
"Each important bank has a step-by step plan on what should
be done in a given situation. The first month is set out day by
day, if not hour by hour," a senior financial official said.
The central bank and Gazprombank declined to comment. The
finance ministry, Sberbank, VTB, Promsvyazbank, VEB and Russian
Agriculture Bank did not reply to requests for comment.
The two biggest threats to the banking sector in Russia are
being cut off from the SWIFT banking messaging system and losing
access to foreign currency, which they usually get from U.S.
banks via correspondent accounts.
In the event of being shut out of SWIFT, Russia already has
its own system, which it is upgrading.
And for foreign currencies there are a number of options,
said the sources, who include a high-ranking state banker, a
well-placed industry official, an executive with a large bank
and an individual in a foreign bank.
The main option relies on at least one major Russian bank
avoiding sanctions and being able to retain access to foreign
currencies via correspondent accounts with major overseas banks.
Other Russian banks would then set up or upgrade existing
correspondent accounts with that bank to shift currency around.
Publicly available documents show VTB has correspondent
accounts with Sberbank and VEB, while Russian Agriculture Bank
has accounts with VEB, VTB, Gazprombank, Sberbank and a number
of other Russian banks.
VEB has such accounts with Sberbank and Gazprombank.
Sberbank, VTB, VEB, Gazprombank and Russian Agriculture Bank
have correspondent accounts with the central bank as well.
However the bulk of these accounts are denominated in
roubles, with only a handful in U.S. dollars and euros.
"This would (them) allow to move the dollars between
themselves bypassing a correspondent account," the source at a
foreign bank said, adding that in order for the back-up to work
one bank in the chain would need to have a U.S. dollar
correspondent account with a U.S. bank as there would still be a
need to make external settlements, necessitating a bridge.
Correspondent accounts would complicate tracking currency
transfers between the banks, making them harder for overseas
authorities to spot, a former central bank official said.
Such an arrangement would represent a "temporary solution"
which might last for three or four months and buy the banks time
to find an alternative, while also reassuring customers.
And a spike in currency transactions by the banks which had
not been sanctioned and were dealing with the foreign
correspondent bank would likely arouse suspicions.
Other options include the central bank providing forex
currency to a 'clean bank' which in turn would then distribute
it to peers via correspondent accounts, sources said.
Alternatively a sanctioned bank could use correspondent
accounts directly with the central bank although that would
raise the risk of the central bank itself being hit with
sanctions and therefore, is unlikely, the sources said.
(Additional reporting by Oksana Kobzeva, Polina Nikolskaya,
Anton Zverev, Tatiana Voronova, Andrey Ostroukh and Katya
Writing by Katya Golubkova
Editing by Rachel Armstrong and Alexander Smith)
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