Russia should not take temporary control of foreign banks' units -central bank

·2-min read
FILE PHOTO: St. Petersburg International Economic Forum (SPIEF)

MOSCOW (Reuters) - Taking over the temporary management of foreign banks' divisions in Russia would not be appropriate, Central Bank Governor Elvira Nabiullina said on Friday, after Moscow seized control of two European state-owned utility companies this week.

President Vladimir Putin on Tuesday signed a decree placing the Russian assets of Finland's Fortum and Germany's Uniper, which both operate power plants in Russia, under Moscow's control. The Kremlin said it could seize more Western assets in this way.

"Such decisions should be made with very good reasons, connected to the stable functioning of the Russian economy," Nabiullina said when asked whether Russia could do the same with banks. "In the banking sector, we do not consider it to be appropriate."

Foreign banks have stepped in to take business from Russian lenders hit by sweeping Western sanctions imposed after Moscow despatched troops to Ukraine in February 2022.

Some, including Italy's Intesa Sanpaolo's Russian subsidiary, saw 2022 profits jump. Austria's Raiffeisen Bank International, earned more than half of its profit last year from Russia.

Nabiullina, speaking after the Bank of Russia held its key interest rate at 7.5% on Friday, said the central bank was assessing which banks may qualify for contributing to a one-off "voluntary" windfall tax the government plans to levy on business in light of Russia's widening budget deficit and narrowing current account surplus.

"There will be no big impact on financial performance, no impact on financial stability," she said.

No. 2 bank VTB this week said its $7.7-billion sanctions-induced loss in 2022 excluded it from participating under the current version of the draft law. Rival Sberbank has already pledged to pay.

(Reporting by Elena Fabrichnaya, Vladimir Soldatkin, Alexander Marrow and Jake Cordell; Editing by Sharon Singleton)