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Several countries of the European Union have decided to sever ties with international banks from the Soviet era in protest against Russia’s invasion of Ukraine. 

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In a joint statement, the finance ministries of Bulgaria, Romania, Poland and the Czech Republic said they will quit the International Bank for Economic Cooperation (IBEC) and the International Investment Bank (IIB). 

Notably, Russia is the majority shareholder in both multilateral development banks.

“Due to continuation and further escalation of the Russian Federation’s unprovoked, ruthless and unjustified military aggression against Ukraine our countries, acting together as EU Member States, have decided to undertake steps in order to discontinue the participation within the International Bank for Economic Cooperation (IBEC) and International Investment Bank (IIB),” the countries’ statement read.

Both IBEC and IIB were set up by the Soviet Union to further trade and investment between communist nations and have been operational even after the Soviet Union fell over thirty years ago.

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IBEC’s members are: Bulgaria, the Czech Republic, Mongolia, Poland, Romania, Russia, Slovakia, and Vietnam.

Following the launch of military action, the US and its NATO allies have bombarded Russia with a wide range of financial sanctions, the most notable being the blocking of seven Russian banks from the SWIFT payments-messaging system.

The impact of sanctions has started materialising with Sberbank, Russia’s leading lender, facing insolvency proceedings in Austria. Russia’s second-largest lender, VTB Bank could also be forced to shutter its European operations.