Italy's Largest Bank to Limit Acceptance of Euro Payments from Russia

Italy's largest bank, Intesa Sanpaolo, will stop accepting payments in euros from Russian banks, with the exception of its own subsidiary in RUSSIA, Intesa, Vedomosti reports, citing sources in domestic banks that have received the corresponding notification from Intesa.

Olga Sorokina, managing DIRECTOR of the legal firm O2 Consulting, told Vedomosti that Intesa representatives in Milan confirmed to the law firm that such a decision had been made. Andrey Gusev, managing partner of the law firm Nordic Star, also knows about this.

The terms of service for the correspondent account of the Russian subsidiary bank will be changed from January 15, according to a statement from Intesa, which was reviewed by Vedomosti. Payments in euros will be limited to commercial payments on accounts in Intesa Sanpaolo itself, in its subsidiaries, and in banks located in Italy. "We ask that you take this information into account when planning payments and assess the risks of refusal to make them in advance," the statement said.

Intesa's decision will primarily affect Russian corporate clients who used the bank's local subsidiary for settlements in euros with counterparties outside Italy, Sorokina notes. First of all, according to her, these are exporters and importers, companies from the service and industrial production sectors. Sorokina links Intesa's decision to pressure from the European Central Bank (ECB), sanctions restrictions and reputational risks.

The ECB requires Eurozone financial institutions to strictly comply with sanctions and monitors transactions related to sanctioned jurisdictions, Gusev confirmed. According to him, about 15 domestic banks have correspondent accounts in the Russian Intesa. Their clients, who depend on long-term contracts with settlements in euros, may now face difficulties, he believes. This is especially true for small and medium-sized businesses working with Italy, which will have to look for alternative payment routes.

Intesa Sanpaolo is an Italian banking group, a leader in the banking services market in Italy and one of the largest banking groups in the Eurozone. Banca Intesa is a wholly owned subsidiary of Intesa Sanpaolo. According to Banki.ru, the Russian bank Intesa ranks 46th in the sector by assets (RUB 173.7 billion as of November 1) and 37th by capital (RUB 38.9 billion).

In September 2023, Russian President Vladimir Putin issued an order authorizing transactions with Intesa shares. Frank Media, citing sources, wrote that Gazprombank structures could buy the bank. And Interfax reported that the credit institution could be acquired by its top management, headed by the chairman of the board of directors, Antonio Fallico. Fallico is an Italian citizen, but has lived and worked in Russia for many years. He headed the board of directors of Intesa Bank in 2003.

The European Central Bank has been increasing pressure on banks remaining in the Russian market since the beginning of the year to prevent them from falling under secondary US sanctions . Washington has warned of major risks for banks if they continue to do business in Russia.

At the end of May, the HEAD of the Italian Central Bank, Fabio Panetta, stressed the need for the country's banks to leave the Russian market, as this entails reputational problems. As the FT wrote, the Western banks that remained in Russia (UniCredit, Raiffeisen Bank International, ING, Commerzbank, Deutsche Bank, Intesa Sanpaolo and OTP) transferred over €800 million in taxes to the Russian budget last year alone, which is four times more than before the start of military action in Ukraine .

The Russian authorities consider the sanctions illegal and demand their lifting. Putin said that the sanctions not only did not break the Russian financial system, but also allowed it to become more independent and stronger. "Our financial system has withstood. Thanks to the targeted actions of the Central Bank, the government, our largest financial institutions. Yes, they also had a failure, they had a decline. But now we can say with complete confidence that the Russian financial system not only withstood this pressure - it has strengthened," the president emphasized.

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