Sberbank, Russia's largest lender, could be removed from SWIFT as part of the latest round of European sanctions.
Reuters reports that the E.U.'s executive Commission proposed on Wednesday to cut Sberbank and two other Russian banks – “named by two EU sources as Credit Bank of Moscow and the Russian Agricultural Bank from SWIFT.”
SWIFT, the Society for Worldwide Interbank Financial Telecommunication, is a messaging system that connects about 11,000 banks in 200 countries and territories, with almost 4,400 banks in the U.S. on the platform. (Read: What is SWIFT and its Role in Global Banking?)
SWIFT is considered a vital piece of infrastructure for international banking. SWIFT doesn’t actually handle money transfers but transmits requests for transfers from one bank to another.
Unlike other Russian banks, Sberbank had not been included in previous SWIFT sanctions, because the bank managed energy payments between Russia and the West.
Still, Sberbank has been the target of previous sanctions. On March 25th, the U.S. Treasury Department’s Office of Foreign Assets Control announced new sanctions which specifically target the CEO of Sberbank.
In early March, Sberbank announced it was leaving most all European markets, saying in a statement, "the group's subsidiary banks have faced abnormal cash outflows and threats to the safety of its employees and branches."
There are less effective alternatives to SWIFT which may now get fresh looks in light of sanctions. Both China and Russia have created their own systems, with 23 foreign banks connected to Russia’s system, and more international banks using China’s platform.
According to published reports, the Chinese and Russian central banks will discuss the use of their respective national payment systems in both countries, Beijing’s envoy to Moscow told the TASS news agency in an interview published on Thursday.
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