U.S. hits major Russian banks with sanctions over invasion of Ukraine

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Among the targets were five major Russian banks, including state-backed Sberbank and VTB, the country’s two largest lenders, as well as wealthy individuals and their families. The United States also announced new export control measures.

Washington imposed the new sanctions after Russian forces invaded Ukraine on Thursday, assaulting by land, sea and air in the biggest attack by one state against another in Europe since World War Two.

The U.S. Treasury Department said U.S. banks must sever their correspondent banking ties – which allow banks to make payments between one another and move money around the globe – with Russia’s largest lender, Sberbank, within 30 days.

The restriction aims to hurt the Russian economy by blocking Sberbank from processing and settling payments within the U.S. financial system.

Reuters first reported correspondent banking restrictions were part of the package on Sunday.

Officials in Washington also wielded the U.S. government’s most powerful sanctioning tool, adding Russia’s second-largest bank VTB as well as three others — Otkritie, Novikombank and Sovcombank – to the Specially Designated Nationals (SDN) list.

The move effectively kicks the banks out of the U.S. financial system, bans their trade with Americans, and freezes their U.S. assets.

VTB on Thursday said the imposition of Western sanctions on its operations would limit the usage of its cards outside Russia and advised customers in other countries to withdraw funds or pay using different banks.

Sberbank, Sovcombank, Otkritie and Novikombank did not immediately reply to requests for comment. The Russian embassy in the United States also did not immediately reply to a request for comment.

The Treasury said it was also imposing sanctions on what it called “financial sector elites,” describing them as senior executives at state-owned banks who it said took advantage of their closeness to the Russian power structure to maintain “an extravagant standard of living.”

These included Alexander Vedyakhin, First Deputy Chairman of the Executive Board of Sberbank; and Andrey Puchkov and Yuriy Soloviev, high-ranking VTB Bank executives.

Washington also expanded the scope of existing curbs on U.S. persons dealing in the debt and equity of Russia state-owned enterprises.