Economy

The central bank said it would resume buying gold on the domestic market, launch a repurchase auction with no limits and ease restrictions on banks’ open foreign currency positions. It also increased the range of securities that can be used as collateral to get loans and ordered market players to reject foreign clients’ bids to sell Russian securities.The bank did not reply to a Reuters request for comment.The steps came after Western allies ratcheted up sanctions on Saturday, including blocking certain banks from the SWIFT international payments system and targeting the Russian central bank, committing to imposing restrictive measures that would keep it from deploying its international reserves to undermine sanctions.The new set of sanctions were likely to deal a devastating blow to the Russian economy and make it hard for Russian banks and companies to access the international financial system. The rouble plunged nearly 30% to an all-time low versus the dollar on Monday.Russians waited in long queues outside ATMs on Sunday, worried that new Western sanctions over Moscow’s invasion of Ukraine will trigger cash shortages and disrupt payments.Several European subsidiaries of Sberbank Russia, majority owned by the Russian government, are failing or likely to fail due to the reputational cost of the war in Ukraine, the European Central Bank, the lenders’ supervisor, said on Monday. The Russia Central bank in several announcements on Sunday sought to ensure financial stability. It said it would resume buying gold on the domestic market from Feb. 28.The bank also ordered market players to reject attempts by foreign clients to sell Russian securities, according to a central bank document seen by Reuters. In a bid to inject cash into the financial system, it said there would be no limit at a “fine-tuning” repo auction it plans to hold on Monday and added that the banking system remained stable after a raft of new sanctions targeting Russia’s financial institutions.The central bank said bank cards were working as normal and that customers’ funds could be accessed at any time. It said it would substantially increase the range of securities that can be used as collateral to get central bank loans.The bank also said it is temporarily easing restrictions on banks’ open foreign currency positions after the sanctions. The measure, allowing banks suffering from “external circumstances” to keep positions above the official limits, will be in place until July 1, it said in a statement.The central bank said that it would continue to monitor changes in currency positions “in order to guarantee the normal functioning of the currency and money markets and the financial stability of lending institutions”. More

(Reuters) -European nations and Canada moved on Sunday to shut their airspace to Russian aircraft, an unprecedented step aimed at pressuring President Vladimir Putin to end his invasion of Ukraine, the biggest attack on a European state since World War Two.Aeroflot said it would cancel all flights to European destinations after E.U. foreign policy chief Josep Borrell said the European Union had decided to close its airspace to Russian traffic.The United States is considering similar action, but has yet to make a final decision, according to U.S. officials. The U.S. government said citizens should consider leaving Russia immediately on commercial flights, citing an increasing number of airlines cancelling flights as countries closed their airspace to Russia.The ban on Russian jets comes as the airline industry continues to grapple with the fallout from the COVID-19 pandemic that is still undermining global demand for travel.Germany, Spain and France joined Britain, the Nordics and Baltic states in declaring bans on Russian use of their airspace, a major escalation in a tactic by mostly NATO allies to wage economic war against Putin in retaliation for the invasion.The West, led by the United States, also unveiled sweeping new financial sanctions on Russia.Russia is now widely expected to retaliate further against the air blockades and other sanctions. It has already responded to the earliest European airspace bans with its own edicts barring airlines from Britain, Bulgaria and Poland.Without access to Russia’s airways, experts say carriers will have to divert flights south while also avoiding areas of tension in the Middle East.A reciprocal airspace ban by Russia and the United States would cause longer flight times for U.S. carriers and could require crew changes on East Coast routes to Asia, said U.S.-based analyst Robert Mann of R.W. Mann & Company, Inc.It could make certain flights too costly to operate for U.S. carriers. “It would just add a lot of expense,” he said.WILL WASHINGTON FOLLOW?”France is shutting its airspace to all Russian aircraft and airlines from this evening on,” French Transport Minister Jean-Baptiste Djebbari said in a Twitter (NYSE:TWTR) post, an announcement echoed across continental Europe.Air France-KLM said it is suspending flights to and from Russia as well as the overflight of Russian airspace until further notice as of Sunday. The closure of European airspace to Russian airlines and vice versa had immediate impacts on global aviation. Air France said it was temporarily suspending flights to and from China, Korea and Japan, while it studied flight plan options to avoid Russian airspace.Finnair said it would cancel flights to Russia, Japan, South Korea and China through March 6 as it avoided Russian airspace, though flights to Singapore, Thailand and India would continue with an added hour of flight time.If U.S. airlines were barred from Russian airspace, it would lengthen some international flights and some would likely be forced to refuel in Anchorage, industry sources told Reuters. The flights that could be impacted include U.S. flights to India, China, Japan and Korea, the sources said. The White House National Security Council declined to comment on whether the United States will close its skies to Russia and referred questions to the Federal Aviation Administration, which did not immediately comment.Swiss International Air Lines, a unit of Germany’s Lufthansa p > Canada also said it had shut its airspace to Russian aircraft effective immediately.A spokesperson for Canada’s transport minister said there are no direct flights between Russia and Canada, but several Russian flights a day pass through Canadian airspace.An Aeroflot flight from Miami to Moscow passed through Canadian airspace on Sunday after the ban was announced, according to flight tracking website FlightRadar24. Canada’s transport ministry did not respond immediately to a request for comment on whether the flight had received an exemption.DISRUPTION TO FREIGHT, LESSORSThe aviation sanctions also spell disruption for logistics companies and the mainly Ireland-based aircraft leasing industry.U.S.-based United Parcel Service Inc (NYSE:UPS) and FedEx Corp (NYSE:FDX), two of the world’s largest logistics companies, have said they are halting deliveries to destinations in Russia. It was unclear whether both firms continue to use Russian airspace as part of their general operations. Neither responded immediately to requests for comment. Airfinance Journal reported EU-based lessors would be given until March 28 to wind down deals with Russian airlines – a setback for the industry after Russian carriers were seen as more reliable performers on jet rental agreements than many global carriers during the pandemic. Russian companies have 980 passenger jets in service, of which 777 are leased, according to analytics firm Cirium. Of these, two thirds, or 515 jets, with an estimated market value of about $10 billion, are rented from foreign firms. More

The document was published by ACI Russia, the national organisation of Russian financial market specialists.The bank’s media relations department did not respond to a Reuters request to confirm the authenticity of the document.Two financial market sources confirmed to Reuters that the document had been sent to brokers by the central bank.It said the measures were being taken by the regulator “in connection with the current crisis in the financial market and in order to ensure the protection of the rights and legitimate interests of investors in financial markets”.The central bank order is valid from 7:00 a.m. (0400 GMT) on Feb. 28 until the “cancellation of this order”.The document does not specify whether it applies to government securities. The order does not apply to applications submitted before 7 a.m. Monday.The document was signed by central bank deputy chairman Philip Gabunia. More

Sberbank Europe AG, which had total assets of 13.64 billion euros ($15.3 billion) at the end of last year, along with its Croatian and Slovenian units, suffered a rapid deposit outflow in recent days and is likely to fail to pay its debts or other liabilities, the ECB said.Europe’s Single Resolution Board has enforced a payment moratoria at the three banks and will now assess whether it was in the public interest to save the lenders.”Sberbank Europe AG and its subsidiaries experienced significant deposit outflows as a result of the reputational impact of geopolitical tensions,” the ECB said in a statement.”This led to a deterioration of its liquidity position,” the ECB added. “There are no available measures with a realistic chance of restoring this position at group level and in each of its subsidiaries within the banking union.”Sberbank Europe AG also has subsidiaries outside the Europe’s banking union, including in Hungary, the Czech Republic, Serbia and Bosnia and Herzegovina. As these fall outside the ECB’s jurisdiction, the bank has contacted local supervisors.Retail depositors are protected up to 100,000 euros per bank in the European Union.($1= 0.8940 euros) More

The rouble had stood around 83.89 late on Friday. Dealers said liquidity was non-existent with nobody wanting to make a price in the currency so all rates were merely indicative. On Reuters dealing the rouble was quoted at 98.00, while EBS showed it at 100.00. One trader at an Australian bank said the indicated range so far this morning was between 86.05-100.00. More

Norway’s $1.3tn oil fund will dump its Russian investments as part of a wider package of support for Ukraine, highlighting how the international financial pressure on Moscow is being ratcheted up. Norges Bank Investment Management, the sovereign wealth fund housed inside Norway’s central bank, has been instructed to immediately freeze all new investments in Russia and to begin to unwind its existing $3bn worth of Russian holdings, according to a statement from the Norwegian government on Sunday evening.“Russia’s attack on Ukraine has challenged Europe’s security in a way we have not seen since the second world war,” said Jonas Gahr Støre, Norway’s prime minister. “It challenges our norms, our values and the principles that our democratic society is based on.” The fund — the world’s largest sovereign wealth investor — held NKr27bn ($3.1bn) in shares in the country at the end of 2021, according to a spokesperson. That equates to 0.2 per cent of NBIM’s total of assets under management.“We will implement the decisions made by the Norwegian government and now freeze the fund’s investments in Russia, meaning we will neither buy nor sell shares,” NBIM said in a statement to the Financial Times. “Together with the ministry of finance, we will prepare a plan to divest from the Russian market.”Nicolai Tangen, the state fund’s chief executive and a former hedge fund manager, had earlier this week indicated that he thought divesting from Russia altogether was a bad idea. “This is obviously a dilemma, but selling out of a market is not black-or-white,” he told a local newspaper. “The Moscow stock exchange has fallen markedly in recent days, and if we sell our stocks now, Russian oligarchs would be able to buy these on the cheap.” Norway has long stressed that the sovereign wealth fund is a non-political, long-term investor, but increasing pressure on the government to act more forcefully in response to the Ukrainian invasion pushed the government to act. “Given how the situation has developed, we consider it necessary to pull the fund out of Russia,” Trygve Slagsvold Vedum, the Norwegian finance minister, said in a statement. The government also said it would allocate up to two billion kroner for humanitarian aid to Ukraine, and will also provide military equipment such as helmets and protective vests. Norway has so far given 250mn kroner in humanitarian aid as a result of Russia’s attack on Ukraine, it said, mainly to the UN High Commissioner for Refugees, the Red Cross and the UN Humanitarian Land Fund.“Russia’s acts of war lead to great civilian casualties, destroy basic infrastructure and drive people into exile. We are therefore increasing our humanitarian aid in connection with the Ukraine crisis,” said Gahr Støre.Norway said that sanctions will also isolate Russia financially “by hitting the central bank and taking a number of Russian banks out of the Swift payment system”. Norwegian airspace will also be closed to Russian flights. More

GENEVA (Reuters) -Swiss President Ignazio Cassis said on Sunday that it was “very probable” that neutral Switzerland would follow the European Union (EU) on Monday in sanctioning Russia and freezing Russian assets in the Alpine country.Cassis, interviewed on French-language Swiss public television RTS, said that the seven-member Federal Council would meet on Monday and review recommendations by the departments of finance and economy.Asked whether Switzerland — a major financial centre and commodities trading hub — would follow the EU in freezing Russian assets, he said: “It is very probable that the government will decide to do so tomorrow, but I cannot anticipate decisions not yet taken.”Cassis said that Switzerland’s neutrality must be preserved and it stood ready to offer its good offices for diplomacy if talks between Ukrainian and Russian officials on the Belarusian border do not succeed, for example by reaching an armistice.”That does not prevent us from calling a spade a spade,” he said.Switzerland has walked a tortuous line between showing solidarity with the West and maintaining its traditional neutrality that the government says could make it a potential mediator.But it faces growing pressure to side clearly with the West against Moscow and adopt punitive European Union sanctions. The government had so far said only that it will not let Switzerland be used as a platform to circumvent EU sanctions. In the biggest peace march in decades, around 20,000 people demonstrated in the capital Bern on Saturday to support Ukraine, some booing the government over its cautious policy. Cassis said on Sunday that Ukrainians fleeing the conflict would be welcome “for a transitional period, which we hope will be as short a possible”.Justice Minister Karin Keller-Sutter said separately that Switzerland was ready to take in those who need protection and also to support the neighbouring countries affected. “We will not leave people in the lurch,” she said.The Swiss government last week amended its watchlist to include 363 individuals and four companies that the EU had put on its sanctions list to punish Moscow.Russians held nearly 10.4 billion Swiss francs ($11.24 billion) in Switzerland in 2020, Swiss National Bank data show. ($1 = 0.9252 Swiss francs) More

WASHINGTON (Reuters) – World Bank President David Malpass said on Sunday the bank may be able to provide Ukraine with more financial resources within days and that additional aid for the war-torn country will be discussed by G7 finance leaders on Tuesday.Malpass told CBS’ “Face the Nation” he was not yet considering what would happen if the Ukraine’s government falls, but the bank is “doing everything we can to support the people of Ukraine.””Right now, we have an instrument that is able to move quickly in the next few days if it’s – if it’s needed – and the circumstances go that way,” Malpass said. “I briefed our board on Thursday and it can be added to by other countries that want to support Ukraine.”A disbursement for Ukraine within days would represent a rapid acceleration from World Bank financing options that Malpass discussed a week ago with Ukrainian President Volodymyr Zelenskiy. Malpass at that time said the bank was readying a $350 million disbursement to Ukraine that the group’s board would consider by the end of March.Malpass said he would join a virtual meeting on Tuesday of finance ministers and central bank governors from the G7 Western democracies, who will discuss other options and “can decide a lot of how much aid goes into Ukraine.”A source familiar with the G7 meeting plans said the finance leaders also will discuss the latest rounds of sanctions against Russia aimed at punishing Moscow for the invasion of Ukraine. These include moves by the United States and its allies to cut key Russian banks off from the SWIFT financial transactions messaging system and impose sanctions against Russia’s central bank aimed at neutralizing its $630 billion in foreign currency reserves.Malpass also said the World Bank, along with the International Monetary Fund, was considering steps to help countries bordering Ukraine to support their intake of Ukrainian refugees, such as Romania and Moldova.He added that the conflict and financial sanctions against Russia would increase hardship for the Russian people as the rouble’s value has fallen dramatically.”You know, this is a tragedy right now for Ukrainians, for the neighbors of Ukraine, but also for Russians,” he said. “They didn’t choose war.” More