03:20 GMT +325 June 2017
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    Plan B: This is How Western Banks are Bypassing Anti-Russian Sanctions

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    Western banks want to make money from Russian bonds, but without violating the Western anti-Russian sanctions regime, Russian media reported.

    Western banks have asked the Russian government for guarantees that Eurobonds money will not go to company under sanctions, a banking source close to the matter told RBK.

    According to the source, currently the potential deal involves several major Russian banks as well as foreign banks, including Swiss and Chinese.

    The information was later confirmed to RBK by a Russian banking source and sources in European banks.

    "US banks has especially insisted on these terms because they are very interested in buying Russian bonds," one of the sources said.

    Another source said that the terms were proposed to bypass restrictions imposed by the US Treasury Department. It warned banks off buying Russian bonds.

    Washington explained that buying Russian debt would breach the policy of sanctions against Moscow, according to The Wall Street Journal.

    "Banks and the Russian Finance Ministry discussed the guarantees. Officials were ready to include them in the deal," the Russian banking source said.

    The terms of the negotiations and the issue date have been kept confidential. It was reported that in February the Russian government sent offers to 25 foreign and three Russian banks. On February 24, the ministry closed the application window.

    Deputy Finance Minister Sergei Storchak said that many American and European banks did not answer to the proposal. However he underscored that there were many other possible partners for Russia.

    For example, a representative of the Industrial and Commercial Bank of China said the bank had submitted an application and would participate in the bond issue.

    While American banks have already decided to stay away from Russian bonds there is still a chance that European banks will join the deal.

    "The Finance Ministry may try issuing Euro-denominated bonds," one of the sources assumed.

    In March, Financial Times reported citing a source that Brussels warned European banks off buying Russian debt. Bloomberg also reported that Russia could delay bond issue until it finds the operators. 

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    banks, bonds, economy, sanctions, Russian Finance Ministry, United States, Russia
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