Turkish banks break off relations with Russian banks amid Biden's decree on secondary sanctions

Turkish banks have refused to work with Russian banks, fearing secondary sanctions. 

Source: Kremlin-aligned news agency Kommersant, with reference to financial market sources and foreign trade participants. 

According to the newspaper's sources, this means severing correspondent relations and stopping payment processing without formal closure of contracts.

One of the sources said that "there are exceptions – for example, in relation to subsidiaries of foreign banks in Russia." 

"The situation for Russian banks began to deteriorate back in the summer and sharply worsened after US President Biden's decree on secondary sanctions was issued on 22 December 2023. As a result, Turkish banks have terminated correspondent relations with almost all Russian credit institutions.

Market participants confirm that similar problems have already begun with Chinese banks," the newspaper writes, citing sources. 

The publication's sources name Nurol Bank, with which about 40 Russian credit institutions worked, and Emlak Bank as being the major participants in settlements with the Russian Federation. Correspondent accounts of Russian banks in Türkiye were opened in Turkish lira, dollars and other currencies – some banks accepted payments in roubles. 

"Banks are breaking off relations due to pressure from the United States. And not only in Türkiye but also, for example, in China," one of the sources added. 

The head of the logistics company Optimalog, Georgy Vlastopulo, said that "problems with Türkiye began in the summer", and in relations with China "these are singular instances".

According to Yuliia Shlonska, the president of customs and logistics broker KBT, serious problems began to arise in late December. According to Shlonska, "banks in Türkiye have taken a break and are not making money transfers from and to Russia. Managers report that no payment from Russia will be accepted now: liras, roubles – it doesn't matter." 

Dmitrii Sukhoversh, the head of multimodal transport at FM Logistic in Russia, added that Turkish banks, which tightened control after the introduction of the twelfth EU sanctions package, began to demand more data and documents to confirm that there are no sanctions against all participants in the chain when making payments in lira - the goods imported should not be on the sanctions lists.

Igor Chernyshov, Director of Business Development at SOTA Logistic, admitted that "even service payments are not going through". "Currently, only one of the Turkish banks allows payments through as a correspondent bank. But if the number of payments exceeds 50 per day, it takes several days to process the requests," said Chernyshov. 

Background: China’s state-owned banks are increasing restrictions on financing Russian clients after the United States threatened secondary sanctions against foreign financial firms that are helping Russia in military operations in Ukraine.

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