* Ukrainian banks pull out of Crimea after annexation
* Big Russian banks staying out for now
* Putin hopes for Russian patriotism over Crimea
By Alissa de Carbonnel and Elizabeth Piper
SIMFEROPOL, Crimea/MOSCOW, April 9 In the rush
to serve clients keen to open rouble accounts, staff at the
first Russian bank to open its doors in Crimea have yet to find
time to open the boxes stacked in the entrance or put up a
Instead they are relying on a plastic banner with letters in
red saying: "Russian National Commercial Bank: Your Russian bank
Not that RNCB needs to advertise its services. With
Ukrainian and Western banks closing, Crimea's 2 million people
have been forced to deal with a cash economy since Russia
annexed the Black Sea peninsula last month - an illustration of
the economic obstacles that might lie ahead for a contested
Only three Russian banks have moved to fill the vacuum, the
patriotism stirred by President Vladimir Putin by reclaiming "an
inseparable part of Russia" falling flat in the face of Western
sanctions that have deterred the country's big lenders.
In particular, many Russian lenders have been alarmed at
moves by Visa and MasterCard to stop providing services, albeit
in most cases temporarily, for transactions involving banks
whose shareholders were on a U.S. blacklist.
RNCB was the first Russian bank into Crimea after the
region's annexation, hurriedly setting up in some of the
branches left empty by Ukrainian subsidiaries of Russian
state-owned banks, Sberbank, VTB and Bank of Moscow, that have
curtailed their work in the region.
It has been followed by two small Russia-focused regional
banks whose limited business activities - they have few dealings
outside Russia - means they have less to fear from sanctions
than larger financial institutions with international exposure.
For Crimea's small businesses and residents, the lack of
options has translated into long queues at hastily furnished
branches like this one in the Crimean capital of Simferopol to
open rouble accounts.
"One of the most pressing problems is the banking system,"
Alexander Batalin, chairman of electrical tools manufacturer
Phiolent, who opened an account at RNCB last week.
Last month, his factory paid its 1,800 employees in cash
after its accounts at Ukraine's Privatbank were frozen. The
company has been unable to complete an order for new European
"The banking system is developing very slowly. There are
only two banks (that are working) but there are such lines
there, they aren't ready to service the new demand," he said.
LACK OF INTEREST
Russian officials have lamented the lack of interest among
banks to operate in Crimea, which voted to join Russia in a
March 16 referendum the West called illegitimate.
With a majority of ethnic Russians, Putin hailed the return
of Crimea as a victory, shrugging off sanctions targeting close
officials and Bank Rossiya, a lender Washington says is the
"personal bank" for his inner circle.
But the experience of Bank Rossiya, which has stopped all
foreign currency operations to work only with the rouble after
being put on a U.S. blacklist, has made other banks wary.
Russia's top two banks, Sberbank and VTB
, are yet to start direct business in Crimea and say
only some branches of their Ukrainian subsidies are working
there at the moment.
Alexei Simanovsky, first deputy central bank governor, said
not all banks were scared.
"There are those which cannot be frightened by sanctions -
they work only in Russia," he said. "Maybe tomorrow (major
banks) will not be there, but I believe that the situation will
resolve itself ... in the foreseeable future, I am convinced
there will be major banks there."
For now the smaller, regional banks may be keeping the
offices warm for when the bigger banks decide they can return,
once they have a clearer view on Western sanctions and any
possible legal moves by Kiev to seize Russian assets.
They could also make a tidy profit.
"Nature abhors a vacuum. Ukrainian banks are leaving and
Russian banks are coming. There is a lack of bank services on
the peninsula, so despite what can hardly be called a healthy
economy, banks could still get a healthy profit," said Maksim
Osadchiy, head of the analytical department at CFB bank.
"With such a lack of bank services, they can bump up
But even the smaller banks have some exposure to Western
systems, showing that few institutions can operate in isolation
in an increasingly global economy.
Osadchiy said RNCB issues both MasterCard and Visa, and has
correspondent accounts in non-resident banks, but with a very
small balance and turnover. Local media said the bank was sold
recently by VTB subsidiary Bank of Moscow to two Crimean
companies close to the new administration.
RNCB was unable to provide details of the reported deal.
A second bank, Genbank, opened its doors on Friday, local
media said. With two branches - one in Siberia's city of Omsk
and in Rostov-on-Don to the south - and a headquarters in
Moscow, the bank issues Visa cards and has in its securities
portfolio loan obligations of non-residents nominated in foreign
Kraiinvestbank from Russia's southern Krasnodar region, just
over the Kerch strait from Crimea, issues both MasterCard and
Visa and has correspondent accounts in non-resident banks.
Genbank and Kraiinvestbank were not immediately available
The three are not yet able to fill the space left by
Privatbank, which had the largest banking services network in
Crimea with 339 branches. It closed them in mid-March.
"There was less than 3,000 hyrvnias on my card to draw my
salary at Privatbank. For me, that's not a great loss, but
nevertheless it's not very nice," said Kemal Adabashev, owner of
a dentist surgery. "It is getting harder and harder to do
business; prices are rising."
The head of the administration of the Crimean city of
Sevastopol, Dmitry Belik, suggested banks had failed their
clients in Crimea, criticising Raiffeisen Bank Aval
for closing its Crimea branches by April 15.
Aval has offered its Crimean clients a choice - either close
their accounts by April 15 and lose a percentage for the early
termination of their contracts, or wait and then close them at
branches in mainland Ukraine.
"Nobody is driving them away from Sevastopol. We are
offering all banks in Sevastopol to renew their registration,
get a licence from the Russian Central Bank and continue
operating in Sevastopol," Belik said.
He criticised Ukrainian lenders for not selling their chains
to their "Russian colleagues".
On this point, Ukraine's Privatbank would not be drawn.
"There will be information in the coming days," the company
said when asked what were they going to do with their branches
For now, most people in Crimea will just have to wait.
"No one told me the bank was not working," said Katya Milko,
27, who works at an electronics firm and wanted to withdraw her
salary from the local unit of Italy's Unicredit bank
which is now up for sale.
"The other bank has such long lines, I can't imagine opening
an account there now. I'll have to talk to my bosses."
(Additional reporting by Natalia Zinets in Kiev, Oksana Kobzeva
and Katya Golubkova in Moscow; Editing by Timothy Heritage and