Russia’s top banker rings alarm bell as China economic crisis to rock Putin’s finances

Tyler Mitchell By Tyler Mitchell Jul6,2024

Russia was cut off from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) banking system within weeks of the invasion of Ukraine.

The decisions pushed Moscow into becoming heavily reliant on the Chinese country to continue conducting business.

But as China’s own financial problems persist, several state-owned banks tightened their rules on funding Russia-based businesses.

The move came in response to Washington DC warning it would impose hefty sanctions on foreign banks found to be providing cash to Russian businesses with clear links to the defence industry.

Nebiullina said that Russia is taking “all the risks into account” but maintained the country still has external financial ties it can rely on as it continues to export its oil and natural gas.

Addressing the press in St Petersburg, she said: “Risks of complete financial isolation may occur only if the global market does not need our export goods.

“Payments are made while they are needed, and economic entities in many countries need our market; the economic interest is in place.”

Last month, the Russian division of the Bank of China suspended operations with Russian lenders subjected to US sanctions to avoid potential retaliation from Washington, according to Russian business newspaper Kommersant.

The division is the second-largest Chinese banking subsidiary operating in Russia with an estimated £5.2 billion in assets.

An anonymous sector insider told the publication: “This is not very good news for the Russian market

“There will be additional costs both in time and the price of processing payments. But the most important problem is that payments go beyond the banking sector, resulting in the state having less control.”

Reuters reported, however, that Putin had negotiated the creation of an alternative payment challenge to allow Moscow to “fly below the US sanction radar” during his visit to Beijing in May.

Tyler Mitchell

By Tyler Mitchell

Tyler is a renowned journalist with years of experience covering a wide range of topics including politics, entertainment, and technology. His insightful analysis and compelling storytelling have made him a trusted source for breaking news and expert commentary.

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