The financial sector has withstood “lawless” Western restrictions, Andrey Kostin has told President Putin
Russian banks have withstood unprecedented Western sanctions and have had a “highly successful” 2023, the head of the country’s second-largest lender has said.
VTB CEO Andrey Kostin met with Russian President Vladimir Putin on Monday, where they discussed the state of the country’s banking sector.
Kostin described the sanctions imposed on Russia since last year by the EU and the US as “absolute lawlessness,” admitting that VTB had suffered “serious losses” when its overseas branches and subsidiaries “were taken away” and “liquidated.”
However, the bank has since recovered and the current year has been “highly successful” not only for VTB, but for the entire sector, Kostin said.
According to the banker, VTB expects to achieve a record profit of 420 billion rubles ($4.73 billion) this year. After losing Western markets, the bank was able to “rebuild quickly,” focusing on the domestic market and so-called “friendly” countries that did not join Western sanctions against Russia, Kostin explained.
As an example, he cited VTB’s branch in Shanghai, which is the only Russian bank in China and is expected to double its turnover in a year.
“This shows once again that we have not been isolated. We are very actively carrying out settlements in national currencies with friendly countries despite all sorts of secondary sanctions,” Kostin said.
Russia and its trading partners started to switch to alternative currencies in trade after the country was cut off from the dollar-denominated financial system as a result of sanctions. Dubbed ‘de-dollarization’, the trend has seen a growing number of developing countries reduce their use of the greenback.
According to Putin, Russia’s “ill-wishers” apparently did not expect the country’s banking sector to cope so well with “difficulties created from the outside.”
“They failed to take into account that a bank is not just a box for keeping money, but a part of the economy. The banking sector reflects the state of the economy as a whole,” Putin said.
Russia’s banking sector had prepared for various scenarios, but the economy turned out to be stable, which is why the country is now seeing economic growth, Kostin concluded.
The Russian financial sector has followed a similar trajectory to the overall national economy in the last 20 months. Last year, Russia’s economy shrank 2.1% amid sweeping Western sanctions over the conflict in Ukraine. However, this year GDP is expected to exceed 3%, Putin said earlier this month.
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