In the latest sanctions imposed on Russia over its invasion of Ukraine, the European Union announced on Wednesday it was blocking seven Russian banks from using the SWIFT messaging system. However, it did not include those handling energy payments.
VTB Bank Otrkitie, Novikombank, Promsvyazbank Bank Rossiya, Sovcombank, and VEB, among other Russian banks, have each been given a 10-day deadline to wind down their SWIFT operations, the EU announced in its official journal.
SWIFT is the predominant messaging system used in global financial transactions, and the EU, the U.S., Britain, and Canada moved on Saturday to block certain Russian banks from using it, but had not yet revealed which banks would be affected.
As a result of the Euro zone's dependence on Russian energy exports, the United States and Britain had been pushing for SWIFT to be banned.
Western authorities have used SWIFT removal to punish Russia for what Moscow refers to as a special operation in Ukraine, a measure that was seen as drastic only a week ago.
An EU official indicated that the banks were chosen based on their ties to the Russian state. Public banks had already been sanctioned in 2014 after Russia annexed Crimea.
"As SWIFT participants, all of these Russian banks are involved in the war effort because of their state connections. We have not imposed a blanket ban across the whole banking system," the official said.
Due to Russian oil and gas, which are still bought by EU countries in spite of the conflict in Ukraine, Sberbank, Russia's largest bank, and Gazprombank have not been included.
In addition to these two Russian banks, the EU official said other measures were in place.
Several officials have been concerned about disrupting energy flows to Europe, and an official pointed out that it was impossible to permit only energy-related transfers while excluding others because SWIFT did not allow for differentiation between payments.
Ingrida Simonyte, the Lithuanian prime minister, said more Russian banks might be excluded from SWIFT, with 11,000 members and no clear worldwide rivals.
Chinese officials have set up a system, but it remains small, and despite a Russian system, SWIFT still accounts for about 70% of transactions in Russia.
If such systems existed, banks could still carry out transfers through workarounds such as faxes or bilateral messaging systems.