BRUSSELS, July 24 The possible European Union
ban on purchases of new shares or bonds issued by Russian banks
would apply only to institutions in which the Russian government
has more than 50 percent, EU diplomats said on Thursday.
The ban, which would include also the possibility of listing
of any new instruments of Russian state-owned banks on EU stock
exchanges, would be part of a list of new sanctions on Moscow
over its role in the conflict in eastern Ukraine.
"Restricting access to capital markets for
Russian state-owned financial institutions would increase their
cost of raising funds and constrain their ability to finance the
Russian economy," one EU diplomat, who spoke on condition of
"It would also foster a climate of market uncertainty that
is likely to affect the business environment in Russia and
accelerate capital outflows," the diplomat said.
The ban, if agreed by ambassadors of EU countries on
Thursday, would apply to Russian state-owned bank debt and
equity with maturities longer than 90 days and cover both
primary and secondary market purchases of instruments issued
after ban enters into force.
EU diplomats said that last year 47 percent of the bonds
issued by Russian public financial institutions were issued in
EU financial markets, amounting to 7.5 billion euros ($10.10
billion) out of the total 15.8 billion euros issued.
Diplomats said that in a proposal submitted to the EU
ambassadors as the basis for their discussions on Thursday, the
European Commission proposed an embargo on arms trade with
Russian arms exports to the EU are worth 3.2 billion euros
while EU arms exports to Russia are worth around 300 million
euros, diplomats said. The embargo would be reversible.
Under consideration is also an embargo exports to Russia of
dual-use goods for military use, military end users or mixed
end-users that amounts to 20 billion euros a year, diplomats
said. That measure would be reversible and scalable, they said.
The EU is also considering a ban on energy technology, but
only for long-term production not to disrupt current supply,
($1 = 0.7422 Euros)
(Reporting By Justyna Pawlak, writing by Jan Strupczewski)