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Russia's banks feel sanctions pinch

Monday, March 24, 2014 - 01:57

March 24 - Sanctions on Russia haven't had much impact on President Putin but there are signs they may be hurting Russia's banks. As Ivor Bennett reports St Petersburg-based Bank Rossiya has asked its clients to refrain from making foreign currency payments.

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It's not a currency most would want right now. But for those in Crimea, the Russian rouble was a welcome introduction. (SOUNDBITE) (Russian) SIMFEROPOL RESIDENT, TATYANA SIDOROVA, SAYING: "It's very convenient. We are really looking forward to roubles being introduced." The rouble did strengthen on Monday - thanks to Russian companies stocking up to pay end-of-month taxes. But the rally's not expected to last. Sanctions are beginning to bite. Russian bank SMP is among those feeling the effects after the US added its owners to the list. Visa and Mastercard halted services to clients for three days - prompting withdrawals totalling an estimated 9 billion roubles. CEO Dmitri Kalantyrsky. (SOUNDBITE) (Russian) SMP BANK CEO, DMITRY KALANTYRSKY, SAYING: "How can people react to sanctions that were imposed on them for no apparent reason? Obviously, you wouldn't see happiness on their faces. Besides, it was sad that these sanctions affected the bank's work." Described by the US as the personal bank of Russia's senior officials - Rossiya was also on Washington's hit-list. Although bullish to begin with, its chairman must now be getting itchy feet - asking clients to refrain from making foreign currency payments. Russia's biggest bank has so far been left unscathed. But Sberbank CEO German Gref is under no illusions. (SOUNDBITE) (Russian) SBERBANK CEO, GERMAN GREF, SAYING: "The current situation has a negative effect on the economic situation around the world: in Russia, in Europe, everywhere. It is clear that those kind of serious political mishaps that lead to grave economic consequences, as we've seen in Ukraine, affect countries all around." Slowing growth, rising inflation - Russia's exploits in Crimea are beginning to take their toll. One of the major concerns now is the level of capital outflow - forecast to hit 70 billion dollars for the first quarter alone. The total outflow for the whole 2013 was just over 60 billion.

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Russia's banks feel sanctions pinch

Monday, March 24, 2014 - 01:57