Turkish banks suspend transactions with Russian counterparts amid US sanctions threats

Turkish banks are universally halting operations with Russian counterparts, reported the newspaper Kommersant, citing financial market sources and foreign trade participants.

According to the newspaper, Turkish banks have severed correspondent relationships with nearly all Russian financial institutions as well as suspended payment processing without formally terminating the contracts. The only exception has been made for the subsidiaries of foreign banks in Russia.

Kommersant sources say the situation worsened in the summer of 2023 and escalated sharply following the December 22 decree from US President Joe Biden, introducing secondary sanctions against international companies aiding Russia in the war against Ukraine. The decree authorizes US authorities to disconnect foreign banks from the US financial system for breaching sanctions against Russia.

Yulia Shlenskaya, president of the customs and logistics brokerage KBT, stated that banks in Turkey are pausing and not executing money transfers from and to Russia. Igor Chernyshev, Business Development Director at SOTA Logistic, conveyed that even payments for services are being blocked, with only one Turkish bank permitting correspondent payments.

The Russian new agency TASS reported, citing a source in the Turkish banking sector, that Turkish banks are "in waiting mode" due to the vagueness of the executive order from the White House, which requires further clarification.

It was reported earlier that China's state banks have also begun to restrict businesses with Russian clients because of Biden's decree. According to Bloomberg, at least two Chinese banks have decided to revisit their Russian operations, sever ties with sanctioned clients, and halt any financial services to Russia's military industry.

  Turkey, USA, Russia