2024-02-23 18:35:31
Clear answer
SPB Bank – the main depository of the St. Petersburg Exchange – February 23 hit under US blocking sanctions. The press release only states that the bank included on the SDN list as a financial institution, since sanctions are also directed against the Russian financial sector. The American Ministry of Finance does not provide additional explanations.
On November 2, 2023, the St. Petersburg Exchange itself came under American sanctions, which led to the blocking of the assets of retail investors – their investments in foreign securities and currencies. Since then, SPB Bank has also actually been under sanctions as a structure controlled by the exchange, in which it has a stake of more than 50%.
Late last year, lawyers working with the bank presented a plan of action that included negotiating with the US Office of Foreign Assets Control (OFAC). The American department was offered four options: two of them related to the issuance of separate licenses for unlocking assets, another proposed to extend and expand the license in force at that time. The fourth option implied the withdrawal of St. Petersburg Bank from the St. Petersburg Exchange and a review of the bank’s sanction status.
According to lawyers, contact with OFAC was established and there were hopes for a constructive dialogue. But then a new sanctions package arrived, adopted after the death of politician Alexei Navalny and on the eve of the second anniversary of the start of the “special operation”* of Russia in Ukraine.
The press service of St. Petersburg Bank reported that after falling under sanctions, the status of the bank essentially did not change, since it has been under restrictions since November 2, 2023. But the legal justifications have changed. “Currently, lawyers of St. Petersburg Bank and international legal consultants who specialize in sanctions are studying the situation. Additionally, lawyers will study possible changes to the previously presented strategy for unlocking client assets,” the press service noted.
Classic blocking sanctions
The moment when the bank needed to get out of the control of the St. Petersburg Exchange has been missed, says Anton Namenov, senior partner of the Pen & Paper Bar Association. “This strategy seems unfeasible, especially since the OFAC press release states that sanctions against PJSC SPB Bank were introduced as a result of its activities in the financial sector of Russia. Therefore, it is likely that removing the bank from the ownership of the exchange will not be enough to lift the sanctions,” he says.
SPB Bank fell under classic blocking sanctions, without any delays, says BGP Litigation partner Sergey Glandin. He draws attention to the fact that several banks were included in the latest SDN list, and OFAC allowed American and Western counterparties to terminate legal relations with them until April 8. However, SPB Bank is not mentioned in this permit.
“This means that the classic blocking sanctions have come into force. For example, counterparties in the chain above St. Petersburg Bank have now simply frozen everything, period,” says Glandin.
Everything is lost?
Anton Namenov from Pen & Paper believes not, and investors still have some room for maneuver. “The introduction of sanctions against St. Petersburg Bank does not mean that negotiations on obtaining a general or special license for unblocking securities of private investors are doomed to failure; they pursue a different goal – protecting the interests of individuals who are not directly targeted by the sanctions restrictions,” he believes .
According to him, investors can also try to unblock assets under the general licenses OFAC Section 50, which allows individuals to transfer funds from sanctioned financial institutions. However, earlier the authors of the strategy for unblocking SPB Bank, Delcredere partners Andrey Timchuk and Andrey Ryabinin, noted that this license does not apply to investors whose assets were blocked, since individuals do not have accounts with the depository – SPB Bank.
According to Sergei Glandin, St. Petersburg Bank has one promising path left – to sue over American sanctions in Russia, as other banks did in the case of blocking assets in the European Union through NSD-Euroclear. True, most of these legal cases have not yet led to anything.
* According to the requirement of Roskomnadzor, when preparing materials about a special operation in eastern Ukraine, all Russian media are required to use information only from official sources of the Russian Federation. We cannot publish materials in which the ongoing operation is called an “attack,” “invasion,” or “declaration of war,” unless this is a direct quote (Article 57 of the Federal Law on the Media). In case of violation of the requirement, the media may be subject to a fine of 5 million rubles, and the publication may also be blocked
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