American Express announced this Sunday that it is suspending its operations in Russia, joining the measure taken on Saturday by the financial transaction platforms Visa and Mastercard.
“In light of Russia’s continued and unwarranted attack on the people of Ukraine, American Express is suspending all operations in Russia,” the company said in a statement.
As in the case of the other two companies, Mastercard specifies that its cards “issued around the world will no longer work in stores or at ATMs in Russia. While cards issued locally in Russia by Russian banks will no longer work outside the country on the American Express global network.”
This means that cards issued outside of Russia cannot be used to make purchases or withdraw money within the country. But citizens with cards issued in the country will be able to buy within Russia, although their transactions will be made through other networks.
“All transactions initiated with Visa cards issued in Russia will no longer work outside the country. And Visa cards issued by financial institutions outside of Russia will no longer work within the Russian Federation.” This is how Visa wrote yesterday in a statement in which it also justified its action due to the war in Ukraine.
“We are forced to act following Russia’s unprovoked invasion of Ukraine and the unacceptable events we have witnessed,” Visa Chairman and CEO Al Kelly was quoted as saying in the note.
American Express suspended its operations in Russia
The decision by the three platforms comes a week following the United States and the European Union (EU), along with other Western partners, agreed to remove “certain” Russian banks from the international Swift system. This accentuates the Russian disconnection from the international financial system.
The Swift transaction system is the foundation of the global financial system. It is used by 11,000 banks in 200 countries or territories to make transfers.
The three companies already announced last week the blockade of Russian financial institutions sanctioned by the US authorities. This in retaliation for the Russian invasion.
This Sunday, the rating agency Moody’s has downgraded the note of the sovereign solvency of the Government of Russia, which was already framed within the “junk bond”, from “B3” to “Ca”. This is due to the expectation that the Russian Central Bank’s capital controls will restrict cross-border payments. Including debt service on government bonds.
“The downgrade to ‘Ca’ is driven by major concerns regarding Russia’s willingness and ability to pay its debt obligations,” the agency said in a statement. Which indicates that the outlook for the country continues to be negative. Especially because of “the significant risks to macroeconomic stability posed by the imposition of severe and coordinated sanctions following the Russian invasion of Ukraine.”
The American bank JPMorgan Chase assured on Friday that it calculates that the Russian economy will contract 7% in 2022 due to the war in Ukraine. This would be double what was anticipated a few days ago, as a result of the sanctions imposed by the West once morest Moscow and the exodus of international companies from the country.
