Russia Can Launch Alternative to Visa, MasterCard in a Few Months Says Sberbank

By Andrey Ostroukh 

MOSCOW--Russia will be able to launch an alternative nationwide payments system "in a couple of months" once parliament passes a relevant law, after the withdrawal of services from some Russian banks by Visa Inc. and MasterCard Inc. as a result of U.S. sanctions, said the chairman of the country's biggest lender OAO Sberbank.

Speaking to reporters Monday, German Gref said the crisis in Ukraine and the standoff between Moscow and the West posed serious risks to the Russian economy and were likely to push capital outflows this year above current expectations of $55 billion. He said the capital flight would weigh on Russia's economic growth, bringing it to zero if net capital outflows reached $100 billion this year.

"Risk of economic recession is in place," the chairman of Sberbank, which has the world's largest chain of ATMs, said.

A second wave of U.S. sanctions late last week targeted President Vladimir Putin's inner circle and Bank Rossiya, which the U.S. Treasury Department said is a personal lender for senior Russian officials. As a result, Visa and MasterCard have stopped servicing the bank, which in turn has revived talks in Russia about a long-planned national banking payments system.

Sberbank's alternative to Visa and MasterCard is a system Pro 100, which reads like 'prosto' in Russia meaning "simple." Sberbank itself isn't targeted by U.S. or European Union sanctions.

Mr. Gref, who is also Sberbank's chief executive, said Russia's financial markets and currency were substantially oversold, and that the ruble would be trading at 33 rubles to the dollar had the crisis not erupted. Around 1045 ET Monday, the ruble was trading around 36.31 to the dollar.

Earlier this month, the ruble plummeted to its weakest ever level of 37 against the dollar, battered by threats from Washington and Brussels to impose sanctions against Moscow after Russia's incursion into Ukraine's region of Crimea.

A broader set of sanctions, possibly including penalties against Sberbank, would be a "serious hit for the country," Mr. Gref said, adding that he hopes it won't happen.

He blamed the media for the escalation of Ukraine-related conflict and declined to comment on developments in the breakaway region of Crimea, which officially became a part of Russia late last week.

"Nothing drastic has happened yet. Let's not read coffee grindings to foretell when the end of the world will happen," Mr. Gref said.

He said that Sberbank isn't planning to close its business in Ukraine, stressing that the bank's offices were periodically shut down in Kiev earlier this year only during the most violent clashes between antigovernment protesters and the police.

Write to Andrey Ostroukh at [e-mail]