On 15 March 2017, the President of Ukraine enacted the decision of the Ukrainian National Security and Defense Council (the “NSDC“) to impose sanctions on five Ukrainian banks with the capital of Russian state-owned banks: Sberbank PJSC; VS Bank PJSC; Prominvestbank PJSC; VTB Bank PJSC; and BM Bank PJSC (the “Sanctioned Banks“).1 The Sanctioned Banks are prohibited from transferring capital outside the territory of Ukraine in favour of any affiliated entities. Based on the current interpretation by the state authorities, this sanction includes prohibition against:

  • transferring any funds from the Sanctioned Banks to their affiliated entities;
  • transferring securities abroad from the securities accounts of the Sanctioned Banks; and
  • entering into any transactions with securities (or other financial instruments) of the Sanctioned Banks through securities traders.

The government and the National Bank of Ukraine are obliged to ensure implementation of the sanctions and take measures to prohibit companies with a state share from depositing funds with the Sanctioned Banks. Therefore, new regulations on implementation of the sanctions and detailed restrictions imposed by these sanctions should be approved within the next few weeks.

The sanctions are imposed for the period of one year.

1The Decree of the President of Ukraine No. 63/2017 from 15 March 2017 enacting the NSDC’s Resolution dated 15 March 2017 “On Imposition of Personal Special Economic and Other Restrictive Measures (Sanctions)”.

 

Author

Hanna Shtepa is a Counsel heading the International Commercial & Trade (ICT) practice in the Kyiv office of Baker McKenzie. The practice is ranked Tier 1 by Legal 500 EMEA. She specializes in international trade restrictions, economic sanctions and export controls compliance, structuring international supplies of goods and services, anti-dumping investigations, public procurement regulations, trade and general compliance, legal regime and restrictions related to temporary occupied territories and business operations during the military state. She also has extensive experience in project finance, focusing on renewable and conventional energy, financial restructuring, sovereign and municipal finance, nuclear liability. Hanna is ranked as Next Generation Partner for International Trade and Energy and recommended as a Rising Star in Banking, Finance and Capital Markets by Legal 500 EMEA 2020-2022. Ms. Shtepa holds her LL.M. in International Commercial Arbitration Law from the Stockholm University, Stockholm, Sweden.

Author