How Sanctions Will Hit Belarusian Banks: Without Foreign Currency Accounts and Transfers to the European Union

Some state banks may disappear.

Radio Svaboda looked at the consequences of the Western sanctions for Belarusian banks and Belarusians.

According to Nasha Niva's sources, Deutschebank, the main correspondent bank of the Belarusian state-owned banks, has closed its correspondent accounts in euros. This is evident from the list of Belagroprombank correspondent accounts.

Currency transactions, judging by this list, are available only through the Russian TKB Bank. Previously, several European banks were available for transactions.

What does it mean

Transfers in euros will become questionable, says Lev Lvovsky, a senior researcher at the BEROC research center.

“There will be no problems with transferring money to Russia; transfers to Ukraine should also work. Difficulties may arise with European partners. How to sell oil products if they are not going to Ukraine? European banks are likely to close all transfers in euros. It may be possible to reach an agreement somewhere, but the cost of transactions will rise and the number of successful deals will drop,” says Lev Lvovskiy.

Which banks will be affected by the sanctions and what will happen to them

American sanctions for banks are the inability to have dollar accounts; almost all correspondent banks transferring dollars and euros, one way or another, are tied to the American jurisdiction.

“The sanctions will affect all state banks, but everything will remain the same with ruble accounts. If correspondent banks refuse to cooperate with state banks (which is already happening), transfers in foreign currency and euros will become impossible for account holders in these banks. This does not mean that Belarusbank, for example, will go bankrupt. He has many projects in which he invests. The state will support this bank to carry out its lending programs for state-owned enterprises. One way or another, the investment portfolio will shrink. The bank will become non-client-oriented. From an enterprise that brings money to the state, the bank will turn into another sore spot,” says Lev Lvovsky.

That is, large state-owned banks will exist, Lev Lvovsky said. Smaller state-owned banks, on the other hand, may disappear. Private banks will not yet touch upon these problems unless some new restrictions are introduced within the framework of the sanctions, Lvovsky believes.

How will the sanctions affect ordinary Belarusian clients of banks?

If a citizen keeps a ruble account in the bank and receives a salary for it, there will be no changes for him, says Lev Lvovsky.

“There will be problems when a person receives money in foreign currency on his card or owns a business and receives transfers from abroad in foreign currency,” says Lev Lvovsky.

There are 24 banks in Belarus at the moment, and four of them are state-owned. In 2018, 50% of all assets were held by the 4 largest state-owned banks: Belarusbank, Belagroprombank, Dabrabyt Bank, and Belinvestbank.