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Russian authorities are planning to block foreign banks from pulling out of the country as long as its banks cannot operate normally overseas, Interfax reported.

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In late February, Moscow approved the launch of a military offensive against Ukraine.

Following the invasion, the US-led Western alliance imposed severe sanctions targeting the Russian banking sector, among others.

Speaking to reporters, Russian Deputy Finance Minister Alexei Moiseyev said: “Our state-owned banks, which are under sanctions, and our banks in general that are under sanctions, have had quite big problems with debottlenecking at their banks located abroad.

“In some cases, they [foreign regulators] have even been seen to take away the shareholder’s right to manage them, which is true legal chaos.”

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Following the discussion with the subcommittee, no foreign banks in Russia will be allowed to sell their assets until the situation improves, the minister said, adding that even if requests are received, they will be rejected.

“We are talking about the subsidiaries of foreign banks. Everyone knows their names. It turns out that we are letting them go normally – Rosbank and the like – while ours cannot do anything there,” the minister noted.

Moiseyev did not rule out the prospect of transferring foreign banks’ subsidiaries to local lenders but at this stage, there are no such plans.

Italian banking major UniCredit and US lender Citi are among the banks looking to exit Russia and stand to lose billions of dollars in the worst-case scenario.