Both the banks and the Russian oligarchs have to deal with the consequences of the Swiss sanctions. By order of Bern, billions of francs in assets are now frozen in the coffers of Swiss banks.
This content was published on March 04, 2022 – 13:35
The Swiss National Bank (SNB) estimates the current value of Russian assets in Switzerland at around 10 billion francs. But the newspaper The New Zurich Times estimates that the real figure, including the assets of five sanctioned oligarchs (who have not been named), could be as high as 150 billion francs.
On Monday, the Swiss government bowed to domestic and international pressure by freezing sanctioned Russian assets, in line with European Union guidelines. Russia has imposed capital controls, limiting the amount of money that can leave the country.
Some media have speculated that the sanctions have prompted wealthy Russians to desperately try to withdraw funds or invest them in the names of relatives. The banks decline to comment due to the confidentiality of their customers.
The oligarchs can count on extremely competent financial advisers, but this does not always protect them from the consequences of sanctions.
Although he denies having influence in the Kremlin, Russian industrialist Viktor Vekselberg had to reduce or cut his ties with Swiss companies after being placed on a US sanctions list in 2018.
PostFinance, the financial arm of Swiss Post, then closed his personal bank account. Viktor Vekselberg protested, arguing that PostFinance is required by law to provide basic services to all Swiss residents. It was only recently that Switzerland’s highest court backed his lawsuit.
Banks have gotten used to navigating global sanctions, but sometimes they get it wrong. In 2014, French bank BNP Paribas was fined $9 billion, while in 2019 Standard Chartered had to pay out $1.1 billion for violating US-imposed measures. In 2009, Credit Suisse was fined $536 million for violating sanctions.
In this case, no bank would want to risk damaging its reputation by being seen as having indirectly supported Russia’s invasion of Ukraine. Although Switzerland only imposed an asset freeze on February 28, it is likely that Swiss banks have already observed the European and American sanctions put in place a few days before.
“The banks certainly closed their doors as soon as the American sanctions were introduced,” Peter V. Kunz, director of the Institute of Business Law at the University of Bern, told German-speaking radio and television broadcaster SRF. “No Swiss bank wants to find itself in the crosshairs of the American authorities,” he stressed.
The introduction of sanctions could lead to the liquidation of transactions or loans that a bank has entered into on behalf of a sanctioned customer. Even before the latest round of sanctions, Credit Suisse would have offloaded the risk of defaults by the oligarchs on loans made for the purchase of yachts, jets and real estate.
the FinancialTimes had access to documents that show defaults caused by “US sanctions against Russian oligarchs”. Shortly after the article was published, the bank reportedly asked hedge funds and other investors to destroy documents relating to loans for yachts from oligarchs.
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