An escalation of US and EU sanctions imposed on Russian banks and finance companies over Moscow’s invasion of Ukraine on 24 February includes several leasing companies with ties to the Kremlin but does not include Russia’s largest leasing company, GTLK, which enjoys significant government backing.
President Joe Biden’s sanctions list, published by the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) includes Russia’s two largest banks – state-controlled Sberbank and VTB Bank – and almost 90 financial subsidiaries around the world, the US government said in a statement.
The US sanctions list covers various leasing subsidiaries of Sberbank and VTB Bank (including Sberbank Leasing and VTB-Leasing).
The list also includes VEB Leasing, a subsidiary of the Russian state-owned development bank VEB Vnesheconombank, Sovcombank Leasing, a subsidiary of Sovcombank, PSB Leasing, a ship lessor, and Gazprombank Leasing, a provider of loans, leasing and project financing. The Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank (VEB), a major leasing provider, is also named.
In addition, Belbizneslizing has been added for its links to Belinvestbank (the Belarussian Bank of Development and Reconstruction Belinvestbank JSC), the fourth-largest financial institution in Belarus.
The US sanctions prevent the named companies from accessing the US financial system and, in some instances, company assets are frozen, preventing them from performing basic functions in the capital markets.
Analysis by Bloomberg shows that the EU has sanctioned 490 Russian entities since Moscow invaded Ukraine, while the UK has sanctioned 16, Canada 413, Australia 407 and the US 108.
In Russia, the state-controlled sector commands approximately 70% of the leased market, the majority of which funds big-ticket items for the railway, air and shipping transport sectors.
Russia’s largest leasing company, by outstanding lease portfolio, is the State Transport Leasing Company (known by its Russian acronym GTLK), with franchises in the rolling stock, aviation and maritime leasing sectors.
“[GTLK] has been under the direct oversight of the ministry of transport since 2009. GTLK’s participation in state programmes for the development of the Russian transportation industry is wide and mostly represented by the support of Russia-produced civil aircraft, helicopters and vessels,” according to Fitch Ratings, in a note published 15 November 2021.
“We believe GTLK’s leading position in the Russian leasing sector, as well as steady government ordinary capital support, underline the growing importance of GTLK and its policy role to the state,” Fitch Ratings said.
GTLK revamps board
Vitaly Savelyev, Russia’s transport minister and chairman of the GTLK board of directors stepped down from his role on the board after the EU imposed sanctions on 26 Russians on February 28, including Savelyev.
In response, GTLK elected a fresh 11-member board, Russia-based news service Interfax reported on 5 March.
Russia’s leasing sector prepared for turbulence as threat of sanctions grow