* VTB says ready to borrow in other currencies, markets
* Calls U.S. sanctions unjust and political
* Says confident it can attract funds (Recasts with comment from VTB about looking at new currencies, markets)
By Oksana Kobzeva and Megan Davies
MOSCOW, July 30 VTB, Russia's second-largest bank by assets, said it is ready to borrow in other currencies and markets after sanctions imposed by the United States thwarted its ability to access dollar financing, a move it called "politically motivated" and "unjust".
The United States on Tuesday imposed sanctions on VTB, Bank of Moscow and Russian Agriculture Bank over Moscow's support for rebels in Ukraine, prohibiting U.S. citizens or companies from dealing with debt carrying maturities longer than 90 days, or with new equity.
The European Union also reached agreement on Tuesday on the bloc's first broad economic sanctions on Russia over its role in Ukraine, diplomats said, in measures which will shut major state-owned Russian banks out of European capital markets.
The largest banks with state ownership of over 50 pct are Sberbank, VTB Russian Agriculture Bank (Rosselkhozbank) and VEB.
"We are confident that we will continue to be able to attract funds as and when needed," VTB said in a statement."VTB Group will be prepared to develop borrowings in local currencies across various geographies."
VTB did not specify which markets it would turn to.
The bank's efforts to raise a $1.5 billion loan from international banks this month have been stymied by the sanctions. VTB had lined up commitments from more than ten banks, including U.S. lenders, but the deal, which was meant to re-open the Russian loan market, is now on hold, according to Reuters LPC.
VTB was going to use the loan to refinance a $3.13 billion three-year loan agreed in 2011 that was scheduled to mature on July 7. The next hard currency debt, a $400 million bond, matures in September 2015.
"Long term, not being able to access any U.S. dollar or euro financing, of course its going to affect (VTB), but you won't see that for a few quarters or (be able to) distinguish (an impact on its operations)," said one Moscow-based financial source.
The move against VTB could have a knock-on effect on Russian companies looking to refinance debt, making it more tricky for them to raise capital even if they are not sanctioned themselves, financial sources said. "If you are busy sanctinoning state owned banks the halo effect on the private sector is immense," one financial source said.
Bankers and financial sources have said that sanctioned banks could turn to Asian markets, particularly China, to fill funding gaps as access to Western funding becomes limited, although there is scepticism about how keen banks there will be to step in.
The United States is lobbying Asian governments to co-operate with its sanctions and Asian banks with operations in the United States would be reluctant to irritate the U.S. authorities by lending to blacklisted companies.
"Asian banks have been very slow at being aggressive on Russia," said the source. "(They're) only going to do it with a strategic angle, rather than just lending, because (they) can probably do as good return lending in China itself or other parts of Asia. But they definitely have the money to do it."
Russia's central bank, which has international reserves of $472.5 billion, has said it will support any domestic banks hit by sanctions.
VTB slammed the sanctions as unfair and indicated it would also harm U.S. interests.
"We consider the decision to be politically motivated, unjust, legally dubious and likely to cause economic harm to all sides," the bank said in a statement.
VTB said that it saw no threat to its international expansion from the sanctions but financial sources said the measures are likely to make life more difficult for its investment bankers in London and New York who provide corporate advice and trading services to international clients.
VTB Capital has cut jobs in New York and London in recent months. Its UK headquarters, bedecked with a large Russian flag, face the Bank of England.
VTB was in a dispute with the Bank of England earlier in the year over demands made on its UK business, but said in April it was in talks to resolve that. (Reporting by Oksana Kobzeva, Megan Davies and Alexander Winning, editing by Elizabeth Piper and Carmel Crimmins)