Sberbank, finally.

Much has been said about the European decision taken on Tuesday, May 31 to establish a partial embargo on imports of Russian oil.

So much so that another sanction decided at the same time by the 27 went almost unnoticed: that of excluding the Russian bank Sberbank from the Swift interbank network.

However, this decision taken more than three months after the first salvo of sanctions against seven Russian banks banned from Swift (VTB Bank, Otkritie, Novikombank, Promsvyazbank, Rossiya Bank, Sovcombank and the Development Bank of the Russian Federation) by Brussels is far from trivial.

In reality, "the European Union's sanctions regime remained not very credible as long as Sberbank was not included in it", assures Nicolas Véron, economist at the Peterson Institute for International Economics in Washington and co-founder of the European think tank Bruegel.

The bank of "babushkas"

By excluding a bank from the Swift network – the main international interbank platform for recording and transmitting transaction orders – the objective is to make it very difficult for this bank's customers to do business internationally.

It is a way of trying to paralyze the commercial activity of a country.

However, this weapon is only really effective "if there is no hole in the device because otherwise, customers of a bank excluded from the device only have to open an account in another establishment still integrated to the Swift Network," said Tyler Kustra, a specialist in the effectiveness of economic sanctions at the University of Birmingham.

>> To read also: "What is the Swift system from which Russia could be excluded?"

And as long as Sberbank continued to be able to use the Swift system, there was not a hole in the European sanctions system but a Mariana Trench.

This bank holds, in fact, a special place in the Russian landscape, both historically and financially.

"There is no real equivalent, in another country, of such a dominant bank", assures Nicolas Véron.

The establishment is the direct heir of the bank which held a monopoly on individual deposits during the Soviet period.

As such, Sberbank entered the era of wild Russian capitalism of the 1990s with a serious advantage of 100 million customers and 16,000 branches throughout Russia.

"It was and remains the bank of the babushkas", sums up Sergey Popov, a specialist in Russian economics at the University of Cardiff.

That is, the bank used by ordinary Russians.

A historical establishment which allows Sberbank to manage today "nearly a third of all the assets held by banks in Russia", specifies Tyler Kustra.

The EU is therefore attacking a behemoth of Russian finance, which also weighs on the international scene: Sberbank was thus in the top 30 European banks before the war even though it had already been subject to international sanctions since the end of the war. 2014 Russian invasion of Crimea.

Diversified activities

Sberbank also enjoys a very special place in the economic landscape.

Officially, the bank was privatized in 1991, but its main shareholder is… the Central Bank of the Russian Federation.

"There is no other country in the world where the central bank actually owns one of the largest commercial banks in the country. This is not only a conflict of interest, but also a situation that allows Sberbank to play a role in the country's economic and monetary policy," said Lajos Bokros, Hungary's former finance minister, in an op-ed published by the Financial Times.

Nothing new in the country of the mixture of genres, between private and public interests, could say the detractors of the system put in place under Vladimir Putin.

Especially since the Russian president placed at the head of Sberbank in 2007 Herman Gref, who had been his Minister of Commerce since 2000.

However, Sberbank is not as subservient to political power as one might think.

"Herman Gref has done everything to improve the credibility of this institution on the international scene", emphasizes the Financial Times.

The CEO has also tried to modernize this old lady by diversifying its activities.

From now on, Sberbank also manages "a TV box, a smart speaker, e-commerce, e-education and even telemedicine services", underlines the economic daily Les Echos.

Herman Gref had even brought Alexeï Navalny onto the board of minority shareholders of the bank.

"It's one of the few places in Russia where everyone works for the state without avoiding me like the plague," the famous political opponent of Vladimir Putin told the Financial Times in 2018.

Is it for this (very) relative independence that Sberbank has been spared European sanctions since the start of the war in Ukraine?

Maybe a little bit.

But another reason is probably the bank's economic importance.

"It is likely that Brussels has waited as long as possible to allow European exporters to continue doing business with customers in Russia who have accounts with Sberbank," said Nicolas Véron.

The limits of sanctions

Brussels also wanted to keep cartridges in reserve.

"This is called the escalation of sanctions. The EU did not sanction all the banks at the same time in order to be able to brandish the threat of always causing more damage to the Russian economy", underlines Sergey Popov.

Without forgetting that “politicians love to come in front of the cameras to ensure that they act. This is why they always keep institutions in reserve to sanction even if it is not economically the most efficient”, regrets Tyler Kustra.

Indeed, by always leaving holes in the system in this way – Alfa Bank (the main Russian private bank) still has access to Swift, for example – Brussels gives the oligarchs and large Russian groups time to organize their financial flows. .

Also, "at this point, there aren't really any Russian companies doing export or import anyway. And cutting Sberbank from the Swift network won't do much harm to Russian citizens who have their current account in this bank since they don't really need to make international transactions", notes Sergey Popov.

Kicking a bank out of Swift is certainly effective, but not a death sentence.

The seven Russian banks thus sanctioned in February "have also been hit by blocking measures such as the ban on making transactions with the customers of these establishments", recalls Nicolas Véron.

This is not the case for Sberbank.

There will therefore be "probably hundreds of small exporters who will be affected because it is too complicated for them to find alternatives", confirms this economist.

But for large groups or large contracts, there will always be a way to circumvent this sanction… for example by going through another bank, particularly in China, which agrees to validate transactions with Sberbank without having recourse to Swift.

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