Russian banking sector to lose $1.6bn on US bans

The new US sanctions are taking their toll on Russia's banking sector, a Russian government study has found.

The Russian banking sector is likely to lose some $1.6 billion (100 billion rubles) due to the economic sanction imposed by the United States, a report by the Russian Presidential Academy of National Economy and Public Administration (RANEPA) has found.

"The sanctions will affect the Russian banking sector, where the losses may reach 100 billion rubles due to a revaluation of capital and a weak financial result, which will be affected by low demand for expensive loans from the private sector. This will amount to more than 6 percent of the banking sector’s profit the Bank of Russia expects in 2018 ($24 billion (1.5 trillion rubles))," the study on the economic situation in Russia stated.

According to RANEPA experts, Moscow was likely to restore some of the losses through a series of initiatives it has already launched, including issuing sovereign Eurobonds as well as establishing new Russian offshore zones.

Earlier this month, US Treasury Secretary Steve Mnuchin announced the fresh sanctions on the Russian Oligarchs and 12 companies they own, 17 senior Russian officials and a state-owned arms export firm, over a range of activities, including Moscow’s alleged meddling in the 2016 US presidential election.

Companies like Gazprom, Burenie and Renova group have also been added to the sanctions list while the US assets of "oligarchs" such as aluminum tycoon Oleg Deripaska and lawmaker Suleiman Kerimov, whose family controls Russia's largest gold producer, Polyus, have been frozen.

Washington said the punitive measures are in response to Russia’s policies regarding Ukraine and Syria, as well as its cyber activities and attempts to subvert Western democracies. The US sanctions are the most significant since Crimea’s re-integration with Russia in 2014.

Moscow has pledged a "tough response" to the sanctions, denouncing Washington's move as an "anti-Russian attack."

Kremlin spokesman Dmitry Peskov told reporters that Russia regards “illegal” the new sanctions and considers them as "open attempts to squeeze Russian companies out of global markets."