On November 21, 2024, the U.S. Department of the Treasury officially announced sanctions against Gazprombank under Executive Order 14024, adding it to the Specially Designated Nationals and Blocked Persons List (SDN List). This measure aims to further restrict Russias access to the international financial system and curb its military actions in Ukraine.

The sanctions are extensive, covering not only Gazprombank and its six overseas subsidiaries but also over 50 Russian banks with international connections, more than 40 Russian securities registries, and 15 Russian financial officials. The U.S. Treasurys Office of Foreign Assets Control (OFAC) stated that Gazprombank is a primary channel Russia uses to purchase military supplies for the war in Ukraine. The Russian government also uses the bank to pay soldiers salaries, combat bonuses, and provide compensation to the families of soldiers killed in the war.

Sanctions Affect Subsidiaries Worldwide

Among the six sanctioned overseas subsidiaries of Gazprombank, GPB Financial Services Hong Kong Limited stands out. As a key financial institution for Gazprombank in the Asia-Pacific region, this subsidiary has been involved in international transaction settlements and foreign exchange services. The sanctions will severely restrict its global financial activities.

In addition to Gazprombank and its subsidiaries, OFAC also targets Russiaforeign tradeSanctions were also imposed on three employees of VTB Banks Shanghai branch. They are:

1. Elena Fedkina: Public Relations Manager of VTB Shanghai Branch.
2. Ilya Lishenko (also known as Lishenko, Ilia): Senior Public Relations Manager of VTB Shanghai Branch.
3. Roman Logov: Deputy General Manager of VTB Shanghai Branch.

These three executives hold key positions at VTB Shanghai Branch, and their sanctions will impact the banks operations in China.

Many countries around the world jointly impose sanctions on Gazprombank

Notably, before the U.S., countries such as Australia, Canada, New Zealand, and the UK had already imposed sanctions on Gazprombank. The U.S. action strengthens global restrictions on Russian financial institutions, aiming to further isolate Russia and pressure it to cease military actions in Ukraine.

Gazprombank, founded in 1990, is one of Russias major banks, jointly established by Gazprom. The bank holds significant influence in international financial markets, long engaged in international transaction settlements and foreign exchange services. Its sanctions will profoundly affect Russias international trade and financial activities.

Background and Impact of the Sanctions

Since Russias military actions in Ukraine in 2022, international sanctions against Russia have intensified. The U.S. and its allies are using economic and financial measures to weaken Russias war capabilities and economic strength. Sanctions on Gazprombank, a key institution in Russias energy and financial sectors, are seen as another major blow to Russias economy.

The U.S. Treasury stated that the Russian government uses Gazprombank to fund its military actions, including purchasing weapons, paying soldiers, and compensating families of fallen soldiers. These financial activities directly support Russias military actions in Ukraine, violating international law and humanitarian principles.

The sanctions also target over 50 Russian banks with international connections and more than 40 Russian securities registries. This will further restrict Russian financial institutions activities in international markets, increase financing difficulties, and pressure Russia to reconsider its policies toward Ukraine.

Impact on Global Financial Markets

Sanctions on Gazprombank and its subsidiaries may trigger ripple effects in global financial markets. As a bank with extensive international operations, Gazprombanks blocking will affect its financial transactions with global partners. International companies and financial institutions with ties to it must reassess relationships to avoid violating sanctions.

Additionally, sanctions on the three VTB Shanghai Branch executives raise concerns about China-Russia financial cooperation. While the sanctions target individuals, they may introduce uncertainty to VTB Shanghais operations. Chinese financial institutions must carefully manage relationships with sanctioned entities to avoid secondary impacts.

International Communitys Response and Subsequent Developments

The latest sanctions from the United States demonstrate its determination to pressure Russia. Other Western countries may follow suit, further expanding sanctions against Russian financial institutions. The international community calls on Russia to cease military operations in Ukraine and resolve the conflict through diplomatic means.

Russia has yet to issue an official response to the latest U.S. sanctions. However, it is foreseeable that Russia will implement corresponding countermeasures, which may include strengthening financial cooperation with non-Western countries and seeking alternative financial channels to mitigate the impact of sanctions.