Oleg Tsaryov: Russian authorities should take control of the work of Russian national banks in Ukraine

Russian national banks continue investing money in Ukraine. Even more, in 2014 alone, their share in Ukraine’s banking sector grew to 12%, says an article by Standard & Poor’s. The same article estimates the banks’ aggregate risks in Ukraine at $23bn-25bn.

A similar figure was cited recently by Russian President Vladimir Putin, who said that Russian banks have already invested almost $25bn in Ukraine. “Last year our Finance Ministry lent them $3bn. Gazprom lent $5.5bn. Just count how much this makes up in total - $32.5bn-33.5bn,” Putin said.

This is especially surprising as most of foreign banks are fleeing from Ukraine. So, it turns out that Europeans are not going to sponsor the Kiev regime – unlike Russians.

The work of banks is vital for any country as banks are like blood for economy. Today, Russian banks are the core of Ukraine’s banking system, with almost $60bn lent and invested in the Ukrainian economy so far. This money is lost for Russia as most of Ukrainian companies fail to repay the loans they borrow. Today, the loan repayment rate in Ukraine is just 20%. And even though Russian banks are forced to grant 80% discounts just to get their money back, they continue giving new loans.

Recently Vnesheconombank invested $303mn in its Ukrainian subsidiary, Prominvestbank. The money was spent on the issue of 638mn shares. In Jan 2015, VTB enlarged the capitals of VTB Ukraine and BM bank by $265mn. In June 2015, it gave VTB Ukraine additional $800mn.

Under Russia’s capital increase program, some 27 Russian banks have been given a total of 1tn RUR. And priority here was given to the banks having subsidiaries in Ukraine. So, it turns out that the Russian authorities are going to support the Ukrainian economy at the expense of their taxpayers.

But this is not all. Last year, the Ukrainian subsidiaries of Sberbank and VTB issued war bonds. In other words, they raised money for the anti-terror operation in Donbass. Thank God, they stopped doing this after the row we kicked up this year.

But they still continue providing preferences to people participating in the operation. On June 8 2014, the Ukrainian authorities adopted a law obliging banks not to charge a borrower an interest on his loans if he is fighting in Donbass. But the shame is that they did it on their own will even before the law was adopted. Following the criticism received from Russia, they removed the ad of this campaign from their websites but we know that they continue providing the service.

I see nothing surprising in this. I know many of the managers of Russian banks in Ukraine. Many of them are nationalists. I regret to note that Russian banks were among the first to fulfill President Poroshenko’s order to stop financing Donbass. So, my question is, “If tomorrow Poroshenko asks Sberbank, VEB or VTB to fund jails and special concentration camps for pro-Russian political prisoners and POWs, will they do it?”

I think the answer is clear. Hundreds of millions of US dollars they are currently investing in Ukraine’s financial system are not just shares, bonds and loans. This is direct support of the Kiev regime. If that regime needs money for shelling Horlivka and Donetsk, why not to give it? It hurts me to know that the weapons the Kiev regime is using to kill people in Donbass have been bought due to money lent by Russian banks.

I hope that the Russian authorities will take control of the work of their banks in Ukraine. We perfectly know the “nothing personal” business rule. But those aiding military crimes must answer for what they do. I wonder if Russian bankers will feel comfortable sitting in court next to Kolomoyskyi.

Oleg Tsaryov, former member of Ukraine’s Supreme Rada specially for EADaily