March 15, 2019 / 1:21 PM / 7 months ago

UPDATE 1-Russian-Venezuelan lender Evrofinance faces restrictions on FX trading

(Adds detail, background)

MOSCOW, March 15 (Reuters) - Russian-Venezuelan lender Evrofinance Mosnarbank, which was placed under U.S. sanctions this month, faces restrictions on its foreign exchange operations but will still be able to trade other assets on the Moscow Exchange, the bourse said on Friday.

The United States imposed sanctions on Evrofinance Mosnarbank on March 11 over its dealings with Venezuelan state oil company Petroleos de Venezuela SA (PDVSA).

The bank, an active player in dollar/rouble trading, told clients it would stop processing dollar payments from March 11 onwards because of its inclusion on the U.S. sanctions list.

The Moscow Exchange told Reuters the bank will retain access to its markets, which span equities, bonds, derivatives, money markets and precious metals as well as foreign exchange, but with “limits on foreign currency operations”.

A source close to the exchange explained that the bourse itself — Russia’s biggest — has not imposed any restrictions on the bank’s accounts or assets.

The bank has lost access to settlements in foreign currency as its FX operations are likely to be blocked by foreign banks that comply with the U.S. sanctions, the source said.

Fitch Ratings said on Friday it had withdrawn its ratings for Evrofinance Mosnarbank.

The main shareholder in the sanctioned lender, with a 49.99 percent stake, is the Venezuelan state development fund Fondo De Desarrollo Nacional. Russia’s second-largest state-run bank, VTB , and another state lender, Gazprombank, each have 25 percent stakes.

VTB and Gazprombank are both expected to hand over their stakes in Evrofinance Mosnarbank to the Russian state property agency following the imposition of sanctions.

According to the website of Evrofinance Mosnarbank, which has offices in Moscow, Caracas and Beijing, it had a corresponding U.S. dollar account with J.P. Morgan Chase Bank.

J.P. Morgan did not immediately reply to a Reuters request for comment.

Evrofinance Mosnarbank also had corresponding accounts in other currencies, including euro, sterling and Swiss francs, opened with VTB bank.

Russian Finance Minister Anton Siluanov said on Friday authorities would need to assess if Evrofinance Mosnarbank requires a state capital injection.

“The bank is rather steady. We would need to consult with the central bank about how the bank is complying with the regulatory requirements,” Siluanov said.

Russia and the United States have been at loggerheads over the situation in Venezuela. Washington has called for the international recognition of Juan Guaido, the Venezuelan opposition leader who declared himself the interim head of state, over President Nicholas Maduro, who retains official support from Moscow.

With Western financial sanctions a persistent threat, big Russian banks have already started working on plans to help each other retain at least short-term access to the global financial system should they be targeted with new U.S. penalties. (Reporting by Elena Fabrichnaya and Katya Golubkova; Writing by Andrey Ostroukh and Tom Balmforth; Editing by Catherine Evans)

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