Western energy and banking giants pull out of Russia, prompting economic chaos
CGTN
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People stand in line to withdraw money from an ATM in Sberbank, St. Petersburg, Russia, February 25, 2022. (Photo: CFP)

Energy giant BP, global bank HSBC and the world's biggest aircraft leasing firm AerCap joined a growing list of companies looking to exit Russia on Monday, as the West increased sanctions on Russia over its military operation against Ukraine.
The West has sought to punish Russia with a raft of measures, including closing airspace to Russian aircraft, shutting out some Russian banks from the SWIFT global financial network, and restricting Moscow's ability to deploy its $630 billion foreign reserves.

Russia's economy was already reeling on Monday. Earlier, sanctions sent the rouble tumbling nearly 30 percent to record lows. It clawed back some ground after the central bank raised its main interest rate to 20 percent, the highest level this century, from 9.5 percent.

"The central bank today increased its key rate to 20 percent as new sanctions triggered a significant deviation of the rouble rate and limited the central bank's options to use its gold and foreign exchange reserves," Governor Elvira Nabiullina told a news conference.

Nabiullina said Russia had an internal replacement for SWIFT that foreign counterparties could connect to but did not give details.
She said the banking sector faces "a structural deficit of liquidity" because of high demand for cash and that the central bank was ready to support it.
"The central bank will be flexible to use any tools needed... banks have enough coverage to raise funding from the central bank," Nabiullina said.

More U.S. sanctions

Also, on Monday, the U.S. imposed sanctions on Russia's central bank and other key sources of wealth.

The measures, which blocked Americans from engaging in any transactions involving Russia's central bank, finance ministry and national wealth fund, are likely to push Russian inflation higher, cripple its purchasing power and drive down investments.

Russian President Vladimir Putin (L) meets with Igor Sechin, chief executive of oil producer Rosneft. (Photo: Agencies)

On Sunday, Russians had queued outside ATMs, worried the sanctions could trigger cash shortages and disrupt payments.

All banks would fulfill their obligations, and funds in their accounts are safe, Nabiullina said, although the central bank was recommending that banks restructure some clients' loans.

British multinational oil and gas company, BP, Russia's biggest foreign investor, abruptly announced at the weekend that it was abandoning its 20 percent stake in state-controlled Rosneft at a cost of up to $25 billion, cutting the firm's oil and gas reserves in half and reducing BP's production by a third.
BP's decision, following talks with the British government, highlighted other Western firms with significant stakes in Russian oil and gas projects, such as U.S. firm ExxonMobil, France's TotalEnergies, and Britain's Shell. Economic no-go areas

Large parts of the Russian economy will be a no-go zone for Western banks and financial firms after the decision to cut off some of its banks from SWIFT, a secure messaging system used for trillions of dollars worth of transactions worldwide.

The European arm of Sberbank, Russia's biggest lender, faces failure, the European Central Bank (ECB) warned on Monday, after a run on its deposits.

British bank HSBC said it was starting to wind down relations with a host of Russian banks, including the second-largest, VTB, one of those targeted by sanctions, a memo seen by Reuters showed.

Amid the broadening squeeze on Russia, even neutral Switzerland said it was adopting European Union (EU) sanctions and freezing assets of some Russian individuals and companies. It joined others by imposing sanctions on President Vladimir Putin and other officials.

Russia said it was barring airlines from 36 countries from its airspace, including European nations and Canada, which had earlier shut their airspace to Russian aircraft. U.S. officials said Washington was considering a similar move.