Russia says the economy is facing “severe blows” from isolation

“Russia’s economy is experiencing severe damage,” Kremlin spokesman Dmitry Peskov told foreign journalists. “But there is a certain amount of security, there is potential, there are some plans, work is going on.”

Peskov was responding to a question about US President Joe Biden’s comments Union State Text That the Russian economy was “pushed” by sanctions.
Sberbank (SBRCY)Russia’s largest lender, excluding Europe, said it would exit on Wednesday Switzerland, After bank regulators in Austria forced the closure of its Vienna-based EU subsidiary. Sberbank warned that Europe would fail after depositors rushed to withdraw their money following the imposition of Western sanctions on Russia’s financial system earlier this week by the European Central Bank.

Sberbank said its subsidiaries were facing “exceptional financial outflows and numerous security concerns regarding its employees and offices”, the group said in a statement, preventing them from being bailed out by order of the Russian central bank.

Bankruptcies are part of a series of unprecedented Western measures against Russia’s vital economy, aimed at reducing funding for Russian President Vladimir Putin’s war efforts. France estimates that $ 1 trillion worth of Russian assets have been frozen, including half of the Russian government’s war reserves.

Moscow has responded with a series of emergency measures aimed at preventing the financial meltdown, halting outflows and safeguarding its foreign currency reserves. The central bank doubled interest rates to 20% and banned Russian brokers from selling securities held by foreigners.

More capital restrictions

The Russian stock market closed on Monday and has not reopened since. The central bank said it would be closed on Wednesday. The government has ordered exporters to convert 80% of their foreign currency earnings into rubles, and has banned Russian residents from doing bank transactions outside the country.

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On Tuesday, the government said Putin was working on a mandate to prevent foreign companies from leaving their Russian assets – in an attempt to prevent an eviction this week. State news agencies TASS and RIA reported that Putin had also signed a decree banning people from taking $ 10,000 or so in foreign currency out of the country.

The central bank went further on Wednesday in an effort to curb the outflow of cash from the country. Stopped money transfers overseas from accounts held by non-resident corporations and individuals in many countries. Restrictions do not apply to Russian citizens.

“Conditions in the Russian financial system and the broader economy are likely to worsen in a matter of days and weeks, as previously announced sanctions increase their numbers and future sanctions add to the persistent negative shock,” Bernberg senior economist Callum Pickering wrote in a research note. Wednesday.

“In the foreseeable future, Russia will be isolated from the Western world and major global markets.”

Oil companies are leading the corporate outflow

Russia’s energy wealth is not directly targeted by Western sanctions, but many of the world’s major oil companies are leaving the country or stopping new investments in projects to explore and improve sectors.

It is difficult for Moscow to sell Russian crude exports to merchants and refineries. Tanker operators are also wary of the danger to ships in the Black Sea.

ExxonMobil on Tuesday announced that it was leaving its last project Sakhalin-1 in the country – “one of the largest single international direct investments in Russia.” An Exxon subsidiary was the operator of the project, and the company’s decision to exit would end its presence in Russia for more than 25 years.

PP (PP), Shell (R.D.S.A.) And Norway’s Equinor all this week said they intend to exit their Russian businesses with the chance of winning billions of dollars in their balance sheet. Of France Total energies (TOT) Has stopped new investments.

Apple, the world’s most valuable company, announced on Tuesday that it was selling all of its products in Russia due to the invasion of Ukraine. Apple Corps has said it will take steps to restrict access to digital services such as Apple Bay within Russia and restrict the use of Russian state media applications outside the country.

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Ford said on Tuesday it would suspend operations in Russia immediately. The The carmaker has a 50% stake in Ford Sollers, a joint venture with Russian company Sollers.

Boeing suspends support for Russian airlines A company spokesman said on Tuesday that Boeing was suspending “parts, maintenance and technical support services for Russian airlines” and that it had “suspended key operations in Moscow and temporarily closed our office in Kiev”.

Airbus also said it would stop providing support services and spare parts to Russian airlines.

– Charles Riley, Nathan Hodge, Chris Liagos, Vanessa Yurkevich, Matt Egan and Angus Watson contributed to this report.

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