Russia sanctions extend further to banking and hospitality sectors as US warns more to come
Sanctions against Russia extended further to banking and hospitality on Thursday as US Treasury Secretary Janet Yellen warned of new financial sanctions against Moscow for its invasion of Ukraine.
Meanwhile, Russian President Vladimir Putin has warned that Western sanctions against his country will destabilize global energy and food markets, promising his country will emerge stronger from the crisis.
“Goldman Sachs is ending its operations in Russia in accordance with regulatory and licensing requirements,” said a spokeswoman for the US investment bank, which was the first major Wall Street institution to distance itself from Moscow.
“We are focused on supporting our clients around the world in managing or closing pre-existing obligations in the market and ensuring the well-being of our employees.”
According to its latest annual report, the company’s exposure to Russia stood at $650 million at the end of 2021, with the vast majority related to claims from private actors and borrowers.
Goldman Sachs did not provide details on the number of employees working in the country.
Citigroup, another major US bank that had total exposure to Russia of $9.8 billion at the end of December, said it was “weighing its options” in the country.
Last year, Citigroup announced that it would seek to sell its retail banking business in Russia.
“As we work towards this exit, we are operating this business on a more limited basis given the current circumstances and obligations,” said Edward Skyler, the bank’s executive vice president for global public affairs.
“We also support our corporate clients in Russia, including many American and European multinationals whom we help to suspend or unwind their activities.”
Marriott on Thursday joined the other two U.S.-based international hotel chains – Hyatt and Hilton – in announcing a freeze on its investments in Russia and suspending any planned new hotel openings there.
Marriott, like Hilton, said it was also closing its Moscow headquarters.
Marriott hotels in Russia are owned by third parties and the company said it was assessing the “ability” of these properties to remain open. Hyatt also said it is evaluating the operations of hotels that remain open there.
All three hotels allocate aid funds, donate profits from Russian properties or open hotel rooms to refugees in Europe.
“The atrocities they are committing against civilians appear to be escalating, so it is certainly appropriate that we work with our allies to consider further sanctions,” Yellen said, without providing details.
But the sanctions taken so far have “devastated” the Russian economy, she said in a conversation with the Washington Post Live.
“We isolated Russia financially. The ruble is in free fall, the Russian stock exchange is closed. Russia was effectively excluded from the international financial system.
And Russia’s “war chest” of $600 billion in foreign exchange reserves, amassed to cushion such a blow, has become “virtually unusable”, Yellen said.
Washington, Brussels and other governments around the world have banned Russian and Moscow banks from making or receiving payments, frozen assets and pushed the country to the brink of default.
US President Joe Biden has banned Russian oil imports, while Britain is phasing them out.
Putin, however, played down the massive sanctions on Thursday, saying Moscow would find a way to “adapt”.
Speaking at a televised government meeting on the 15th day of Moscow’s advance into Ukraine, Putin said Western sanctions against Moscow had begun to hurt the United States and Europe.
“Their prices are going up, but it’s not our fault. This is the result of their own miscalculations. There is no need to blame us,” Putin said.
While the 69-year-old Kremlin chief said Moscow continued to export oil and gas, including through conflict-torn Ukraine, he blamed the West for soaring oil prices ‘energy.
“They tell their citizens to tighten their belts, to dress warmer,” Putin said.
He stressed that Russia “meets all our obligations in terms of energy supply”.
Putin mocked Washington for what he said were their efforts to sign energy contracts with Western adversaries Iran and Venezuela.
He also warned that Western sanctions could send global food prices skyrocketing, as Russia is one of the world’s top fertilizer producers.
“If they continue to create problems for the financing and the logistics of the delivery of our [fertilizer] goods, then the prices will go up and that will affect the final product, the food products,” he said.
The wholesale price of gas and crude oil in Europe hit record or near-record prices this week on supply fears over Putin’s decision to send tens of thousands of troops to Ukraine on February 24.
The United States and Britain announced this week they were cutting off Russian energy imports in response to what the Kremlin called Moscow’s “special military operation,” triggering another price spike.