Bank of Russia Not Concerned About Ukraine Risks for Russian Lenders

By Andrey Ostroukh 

ST. PETERSBURG, Russia--The Ukrainian crisis caused major turmoil in Russia's financial sector but the Bank of Russia now has no concerns about Ukraine-related risks for Russian lenders and hopes that credit card giants Visa and MasterCard will continue operations in Russia, the central bank chairwoman said Tuesday.

Geopolitical tensions between Russia and Ukraine, exacerbated by Moscow's annexation of the Ukrainian peninsula of Crimea, and the subsequent Western sanctions against the Kremlin, fueled capital flight from Russia and sent the ruble to all-time lows.

The emergency situation prompted the central bank to raise interest rates in an attempt to shield Russia from external shocks, and the parliament passed a law that would make doing business in Russia difficult for U.S. credit card companies.

Speaking at a news conference at an annual banking forum, Elvira Nabiullina said the central bank isn't concerned about the health of the Russian banking sector, although net capital outflow this year may miss the forecast of $85 billion-$90 billion.

In the first five months, Russia drained around $70 billion in net capital outflow, more than in the whole of 2013.

Commenting on a draft law to ban companies and banks with headquarters in Russia, which is being considered by the Ukrainian parliament, Mrs. Nabiullina said such a law will have a negative impact on the already crisis-hit economy.

Earlier on Tuesday, Sberbank, Russia's largest lender, expressed hopes that this law won't be passed as it would take its toll on the Ukrainian economy.

Write to Andrey Ostroukh at [e-mail]