Belarus loses access to European banking system due to sanctions

The Belarusian banking system has felt the heavy footstep of European and American sanctions imposed in the summer in response to repression and the forced landing of the Ryanair flight in Minsk.

European banks began to massively close dollar end euro correspondent accounts of Belarusian states-owned companies, making it impossible to conduct operations in two key world currencies.

Last week, the correspondent accounts of Belarusbank, Belinvestbank and Belagroprombank were closed by Deutcsche Bank, a key correspondent bank for Belarusian banking institutions, Nasha Niva reports, citing sources.

Belagroprombank, one of three banks sanctioned by the EU, has lost correspondent relations not only with Deutsche, but also with all its European correspondent banks, including Germany’s Commerzbank, DZ Bank, Italy’s Unione di Banche Italie and Poland’s PKO Bank.

Even Russian banks, including Sberbank, VTB and Rosselkhozbank, refused to conduct currency transactions with Belagroprombank.

A similar situation has developed with Belarusbank and Belinvestbank, which are also included in the EU sanctions list, Nasha Niva reports.

Two thin threads on which the Belarusian banking sector is still hanging and which can break at any time are the European subsidiary of VTB (conducts operations for Belarusbank) and the Moscow TKB Bank, which holds euro accounts for Belagroprombank.

Isolation from the world monetary system has already hit Belarusian business. Foreign currency payments are still technically possible through small Belarusian and marginal Russian banks, but this all makes it very difficult to fulfill existing contracts and jeopardizes new ones, one of the entrepreneurs complained to Nasha Niva.

“It used to be that a three-day delay in payment was considered a scandal, now two weeks is a norm because money goes around half the world to get where it needs to go,” he says, adding that the private sector is likely to move to other banks or look for opportunities through neighboring countries.

On June 24, the European Union announced the imposition of economic sanctions against the regime of Alexander Lukashenko for “serious human rights violations”, “brutal suppression of civil rights”, as well as the forced landing of the Ryanair flight in Minsk, which the West qualified as air piracy.

All Belarusian banks with a state share of more than 50%, as well as subsidiaries of Belarusbank, Belinvestbank, Belagroprombank, fell under sanctions prohibiting the provision of financing for a period of more than 90 days.

Lukashenko, commenting on the EU decision, said that the sanctions show “impotence” and called for “scoundrels on the other side of the border” to prove this in practice.

(C)UAWIRE 2021

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