DUBAI, March 2 (Reuters) – Dubai’s Mashreqbank (MASB.DU) has stopped lending to Russian banks and is reviewing its present publicity to the nation because of heightened dangers following Moscow’s invasion of Ukraine, two sources accustomed to the matter advised Reuters.
The transfer is among the first reported cases of a financial institution within the Center East halting ties to Russia and underscores rising world nervousness about falling foul of Western sanctions.
Mashreqbank declined to touch upon the transfer, which comes as banks world wide wind down ties with Russian lenders after a spate of recent sanctions introduced by the US, Britain, the European Union and Canada, together with blocking entry to the SWIFT worldwide cost system for some banks.
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Russian monetary establishments (FIs) have been a part of the rising market mortgage portfolio that Mashreqbank had grown in recent times to develop past the Center East, the sources stated.
The publicity was primarily short-term or one-year loans to banks, one of many sources added.
Mashreqbank’s actions point out that rising market banks are additionally getting nervous about their Russian publicity and the potential danger of secondary sanctions, bankers stated.
Final yr, Mashreqbank agreed to pay $100 million in penalties to resolve a U.S. authorities probe into violations of sanctions towards doing enterprise with Sudan.
Mashreqbank’s resolution to cease lending to Russian FIs was not on account of any directive from the Central Financial institution of United Arab Emirates (CBUAE), however was to mitigate the danger from its Russian publicity, the sources stated.
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A pointy fall within the Russian rouble and the downgrading of Russia by score companies have been additionally considerations as a result of it impacts the credit score high quality of Russian banks, they added.
Ranking company S&P lowered Russia’s long-term overseas foreign money credit standing to ‘BB+’ from ‘BBB-‘, and warned it may decrease scores additional, after getting extra readability on the macroeconomic repercussions of the sanctions.
Russia’s central financial institution has beefed up its banking sector with billions in extra overseas trade and rouble liquidity, whereas the federal government has individually pledged full-scale help to sanctions-hit firms. learn extra
CBUAE, when requested for remark, directed Reuters to the Focused Monetary Sanctions web page on its web site and referred inquiries to the Government Workplace of the Committee for Items and Supplies Topic to Import and Export Management, which Reuters couldn’t instantly attain for remark.
Bankers stated the UAE central financial institution has to date not issued any directive on doing enterprise with Russian firms or publicity.
Gulf Arab states together with the UAE have taken a impartial stance between Western allies and Russia, with which they’re companions beneath an oil producers’ grouping referred to as OPEC+.
UAE state funds resembling Mubadala have invested in Russian firms and have strategic ties with Russia’s sovereign fund, the Russian Direct Funding Fund (RDIF).
Mubadala declined to touch upon whether or not it’s taking any motion on Russian publicity. It has invested $3 billion in Russia in about 50 firms, in response to its web site.
Abu Dhabi Funding Authority, the UAE’s largest sovereign fund, additionally declined to touch upon its Russian publicity.
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Reporting by Saeed Azhar and Yousef Saba, Modifying by Louise Heavens; Modifying by Alexander Smith
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