Thursday,
17 August 2017
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Russia draws up bill to replace Ukrainian banks with Russian ones in Donbas

Russia has drawn up a bill that grants Russian banks the power to establish branches in areas where large numbers of their “compatriots” are exposed to "humanitarian catastrophes," such as in the Donbas, Russian newspaper Izvestia has reported.

REUTERS
REUTERS

As stated in the explanatory note to the document, it envisages "the creation of a legal framework for the provision of social and economic support to large Russian populations living in an area of humanitarian catastrophe."

The author of the document Yevgeniy Fedorov (member of Duma’s Committee on Budget and Taxes) told the publication that the bill is under consideration by the government.

Fedorov said he was confident that among 800 Russian banks there will be those willing to launch operations in the region with "millions of potential customers."

Banks have already started operations in the annexed Crimea, despite Western sanctions, he said.

The right to introduce a regime for the provision of social and economic support to compatriots living abroad belongs to the Russian government, while the Supreme Court identifies the scale of a humanitarian disaster in an area where "compatriots" live (based on statements by these bodies).

To determine the boundaries of a disaster zone, the Supreme Court may use materials from a "referendum," "the election of local authorities" or other documents provided by the applicants, according to the bill.

The head of analytical department of BKF bank Maxim Osadchiy said that according to instructions from the Bank of Russia as of April 2, 2010, in order to receive permission to set up a branch in the territory of a foreign state a bank must submit a copy of an authorization document from the foreign regulator (in this case the National Bank of Ukraine).

"Activities of Russian banks in Ukraine without approval of the NBU could trigger a new round of sanctions against these banks, as well as against Russia," added Osadchiy.

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