The latest episode marks a new low for Russia and Ukraine. Relations between the neighbors have been frosty, to say the least, since Russia annexed Crimea from Ukraine in 2014 and supported a pro-Russian uprising in east Ukraine in the same year – although the Kremlin denied any involvement.
Needless to say, Russia’s actions provoked international condemnation and a range of U.S. and European sanctions targeting individuals, entities and certain sectors (including financial, energy and defense), were imposed on Russia.
These were extended recently until various points in 2019 and the latest provocation with Ukraine certainly won’t help to persuade the U.S. and Europe from potentially extending punitive measures designed to punish Russia and anyone else seen to have played a role in the Ukraine crisis.
VTB Bank has not been unscathed by Ukraine-related sanctions either, and neither has Andrey Kostin, who is seen as a close associate of President Putin, are both subject to sanctions.
As a designated government officials leading a state-owned Russian bank, VTB’s Kostin was placed on a U.S. sanctions list in April 2018, along with a group of Russian oligarchs, government officials and entities, due to what the U.S. Treasury department called “worldwide malign activity.”
Kostin blamed the U.S. sanctions on a misunderstanding,” however, told Russian state news agency TASS at the time that he had done nothing wrong and had always tried to foster good working relations with U.S. banks and investors, Reuters reported earlier this year. In May, Kostin told CNBC that he had perhaps been put on a sanctions list mistakenly.
“I am listed as the senior government official,” he told CNBC’s Geoff Cutmore in May. “Which I’m not of course, I’m the chairman of the one of the leading commercial international listed bank and the malign activity which was mentioned and included Ukraine, hacking Syria, or undermining American democracy, which has nothing to do with this of course, and all the banking community all around the world knows me as a banker,” he said.
Earlier on Wednesday, Riccardo Orcel, head of VTB International, told CNBC that the bank would deal with fresh, or extended, sanctions if that happened.
“We’ve been working in full compliance of the sanctions and in the last three years we developed our M&A business, our capital market business with transactions serving clients in many parts of the world so of course we need to see what will be the result of recent political events but in full compliance of rules, regulations and sanctions we hope we can continue our business.”