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Falling ruble, bankrupt Russian bank subsidiaries: The consequences of Western sanctions – rts.ch

The consequences of Western sanctions against Russia were not long in coming. The ruble collapsed on Monday morning at the opening of trading, while the European subsidiary of the Russian bank Sberbank is in “bankruptcy”. The price of oil continues to jump.

RUBLE – Collapse against the dollar and the euro

The ruble on Monday broke historic records of weakness against the dollar and the euro on the Moscow Stock Exchange, due to sanctions imposed due to the Russian invasion of Ukraine.

>> Read also: The West draws the Swift weapon, a key cog in global finance

From the first second of exchanges, it was necessary to provide 90 rubles to obtain a dollar on Monday morning, against 83.5 at the last official rate on Wednesday, before the invasion of Ukraine. Against the euro, the exchange rate fell from 93.5 to 101.19 rubles.

These were the caps set, forcing a pause in trading. On resumption, after about fifty minutes, the fall continued. The greenback was trading at 95.48 for 1 dollar and 107.35 for the euro.

The Moscow Stock Exchange indicated before its opening that ceilings had been set – 90 rubles for one dollar and 101.19 rubles for one euro – beyond which trading would stop, a limit reached in the first seconds of the session.

>> The minute-by-minute follow-up of the war in Ukraine: Ukraine to demand ‘immediate’ ceasefire in talks with Moscow

RUSSIAN PRIVATE BANKS – European subsidiaries in distress

The European Central Bank noted on Monday the “bankruptcy or probable bankruptcy” of the European subsidiary of the Russian bank Sberbank, among the largest in the country, because of “significant” withdrawals of deposits due to the conflict in Ukraine and the sanctions decided. by Western countries.

Sberbank Europe AG, domiciled in Austria, and its subsidiaries in Croatia and Slovenia have “experienced significant outflows of deposits due to the impact of geopolitical tensions on their reputation”, explains the banking supervisor of the ECB in a press release, considering that “in the near future, the bank may not be able to pay its debts or other commitments as they fall due”.

The withdrawals have led to a “deterioration of the liquidity” of the bank and “there is no means available” which gives a “realistic chance” of bailing out the coffers of the institution, continues the ECB.

The two largest Russian banks, Sberbank and VTB Bank, have been targeted in particular since Thursday by heavy American sanctions, aimed at largely limiting their international transactions. The sanctions targeting the Russian banking system have since been reinforced with, in particular, the announcement on Saturday of the exclusion of certain institutes from the Swift system.

RUSSIAN CENTRAL BANK – Key rate raised to 20%

The Russian central bank announced Monday to raise its key rate very sharply, by 10.5 points to 20%, to face the severe economic sanctions.

“The Board of Directors of the Bank of Russia has decided to raise the key rate to 20% per year,” said the monetary institution, quoted by Russian news agencies.

“The Bank of Russia will make new decisions on the key rate based on an assessment of the risks associated with external and internal conditions and the response of financial markets to these risks,” she added, while it tries to defend the ruble.

The United States, the European Union and other countries have announced that they will exclude certain Russian banks from the Swift international banking payment system and any transactions with Russia’s central bank.

Before Western sanctions and the invasion of Ukraine, inflation was already soaring in Russia, forcing the Central Bank to raise its key rate several times. The key rate is the main tool for fighting inflation.

OIL – The price of a barrel continues to soar

The price of a barrel of WTI crude oil jumped more than 6% on Monday and Brent more than 5%, as operators grew increasingly worried about an energy crisis after new Western sanctions against Moscow. due to his invasion of Ukraine.

WTI rose 6.27% to $97.33 around 0445 GMT and Brent rose 5.24% to $103.06. “The withdrawal of some Russian banks from Swift could lead to oil supply disruption as buyers and sellers try to figure out how to navigate the new rules,” Andy Lipow of Lipow Oil Associates noted at Houston.

Operators will closely follow a Wednesday meeting of OPEC+, which brings together the thirteen members of the Organization of the Petroleum Exporting Countries (OPEC), led by Saudi Arabia, and their ten partners led by Russia, meeting during which they will discuss plans for additional production.

BP drops 7%

The British oil giant BP fell by nearly 7% on Monday morning on the London Stock Exchange, the day after the announcement of its divestiture from the Russian giant Rosneft, in which it previously held a 19.75% stake, following of Russia’s “aggression” of Ukraine.

Shortly after 09:50 GMT, BP shares fell 6.74% to 353 pence on the London Stock Exchange. For its part Rosneft, part of whose capital is also listed on the British market, collapsed by 40.26% to 2.80 dollars.

STOCK EXCHANGES – European markets down on Monday

European stock markets closed lower on Monday, measuring the weight of major economic sanctions against Russia, including the exclusion of major banks from the Swift system.

In Paris, the starred CAC 40 index fell 93.60 points (-1.39%) to 6658.83 points, while in Frankfurt the Dax lost 0.73%.

The SMI for its part closed slightly up 129 points to 11,987 points.

Asian markets were more resilient: Tokyo gained 0.19%, Shanghai 0.32%, and Hong Kong lost 0.24%.

asch with agencies

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