The DPR and LPR will become the first territories in Europe without banks
Moscow - Kyiv, December 10 (PolitNavigator, Mikhail Stamm) - From December 15, all banks - both Ukrainian and Russian - will stop operating in the Lugansk and Donetsk People's Republics. This is the first time in modern history that a territory where about 2 million people live will be left completely without banking services, notes RBC. The authorities of the DPR and LPR promise to create their own banks in the territory. In the meantime, citizens will have to travel outside the republics to withdraw money from their accounts.
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As the NBU press service told RBC, the regulator has already sent a telegram to Ukrainian banks demanding that they suspend operations in the territory of the self-proclaimed Donetsk and Lugansk People's Republics.
There are branches of 81 banks in the Donetsk region, and 66 banks in the Lugansk region. The volume of loans issued by banks in the Lugansk and Donetsk regions is 6% of the assets of the banking system of Ukraine, the share of deposits is 9,8% of all deposits. There is no data on the number of bank branches in the territory controlled by the militias. Now approximately 1,5–1,7 million people live there, which is more than three times less than in the Donetsk and Lugansk regions as a whole (6,5 million people).
The Ukrainian subsidiaries of Sberbank and VTB will also have to stop working in the DPR and LPR. The Ukrainian “daughter” of Sberbank told RBC that until the end of November, only two branches were operating in the Donetsk region: Artemovsk and Stavropol (in total, it has 22 branches in the Donetsk region), two branches in the Luhansk region (there are ten offices in total). An RBC interlocutor familiar with the specifics of Sberbank’s business says that the DPR and LPR account for 15–18% of Sberbank’s business in Ukraine.
Sberbank and VTB have collateral received for loans in the Donetsk and Lugansk regions. VTB in the Donetsk region has $6,6 million in collateral ready for sale, which includes residential and commercial real estate ($300 and $6 million, respectively), land plots ($27,8 thousand), and equipment ($254 thousand). Sberbank in the Donetsk region has real estate collateral worth $6 million. Leaving the DPR and LPR could cost Sberbank $520 million.
The Russian Central Bank is not carrying out any activities to restore the financial systems of the DPR and LPR and is not participating in negotiations on this topic, a source in the Bank of Russia told RBC. Russian authorities are afraid of introducing the ruble on the territory of the self-proclaimed republics, since this threatens the introduction of additional sanctions, a government source told RBC.
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