Russian-Venezuelan bank under sanctions

RUSSIA / FSU POLITICS - In Brief 13 Mar 2019 by Alex Teddy

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On March 11 the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned Evrofinance Mosnarbank for its “assistance” to PDVSA and to the Maduro regime. However, the only example cited in the press release refers to the oil-backed cryptocurrency Petro. According to the Treasury, investors were encouraged in early stages of the project to finance the Petro through an account owned by the Venezuelan government in Evrofinance Mosnarbank. The bank is owned by the Venezuelan FONDEN Development Fund (50% minus 2), Russian state-owned Gazprombank and Russia’s second largest bank VTB (25% plus 1 each). Gazprombank and VTB are also under “soft” sectoral US sanctions. While their assets are not frozen, long-term financing of these banks is not permitted. GPB and VTB were reportedly trying to sell their shares at the end of last year. However, the shareholder structure is protected by an intergovernmental agreement between Russia and Venezuela. Therefore, they require permission at least from the Kremlin in order to make any change in the Russian side. VTB CEO Andrey Kostin said that the only reason behind the attempt to sell his shares at the end of 2018 was the fact that the bank was not very active. While this is true, VTB and GPB are shareholders since 2011, and thus, the context indicates that VTB and GPB foresaw an intensification of the Venezuelan crisis that could spill over into the Evrofinance and, as a consequence, into them. The bank had been under sectoral sanctions since 2014 because of the Ukrainian crisis. Now, it is included in the Special Designated Nationals and Blocked Persons List, which includes persons, groups and entities. The US...