Banks worried about Russia sanction ‘puzzle’, Bank of Spain says

By Jesús Aguado

MADRID (Reuters) – Banks and supervisors are concerned about implementing sanctions against Russian oligarchs as they vary in scope and in who they target across different jurisdictions, Bank of Spain Director General for Supervision Mercedes Olano said on Thursday.

“For internationally active banks it’s a puzzle because sanctions are not the same in Europe as in the U.S. or in Britain or Japan,” she said, adding that talks were being held to clarify how financial institutions should act.

“Which sanctions do the banks have to comply with, the European ones, the American ones, all together, separately?” Olano asked herself during a press briefing.

Targets of wide-ranging Western sanctions against Russia following its invasion of Ukraine have already included banks, oligarchs and investment. On Thursday, Ukraine renewed a call for financial sanctions crippling enough to force Moscow to end what it refers to as its “special operation” in the country.

Olano said lenders, banks and market supervisors were trying to determine which sanctions should be applied, and how.

“In broad terms, we all know what to do, but then when you have to actually include it into your (daily) operations, to set up systems (…) so that you are warned if you are not complying with a sanction, that’s complex,” Olano said.

It was not a question of whether sanctions were being implemented in time but rather a question of “how difficult it was to make sanctions compatible,” she added.

Last week, the European Central Bank said euro zone banks’ direct exposure to Russia was relatively minor but sanctions could still reverberate through the financial system through volatility in energy and commodity prices.

Spanish banks in general rank among those less exposed to Russian credit, with Spain’s central bank estimating their credit risk at just above 700 million euros.

Olano said that meant they should be less affected by the implementation of sanctions.

(Reporting by Jesús Aguado; Editing by Nathan Allen, Kirsten Donovan)