Russia

As Poslovni Dnevnik/Tomislav Pili writes, Russian bankruptcy, which is increasingly likely to occur soon, will not be felt by the Croatian financial system, and global finances should not be shaken by such a scenario either, according to Croatian analysts, Croatia News reported. After announcing on Monday that the Russian Ministry of Finance will pay out interest to foreign investors in rubles instead of dollars, the story coming out of Moscow altered Russia's state treasury has announced an order has been sent to pay 117.2 million U.S.

Russians are starting to feel the economic pinch after Western countries imposed an unprecedented set of sanctions over Moscow’s invasion of Ukraine, Al Jazeera reported. Following weeks of mounting tensions, Russian President Vladimir Putin ordered a land, sea and air invasion on February 24, triggering a wave of financial restrictions that have plunged the value of the rouble, skyrocketed inflation and left many jobless.

Italy's biggest bank Intesa Sanpaolo will detail the impact of the Ukraine conflict on its 2022 earnings when it reports first-quarter results in May, its CEO told a financial conference, according to a person who attended the event, Reuters reported. Addressing the Morgan Stanley European Financials conference on Thursday, CEO Carlo Messina confirmed the bank's financial targets but said details on the net income impact for this year would be provided when Intesa next reports earnings.

Intesa Sanpaolo said on Wednesday that its loans to Russian and Ukrainian clients amounted to 5.1 billion euros net of guarantees from credit export agencies, which is around 1% of the total for Italy's biggest bank, Reuters reported. Intesa added in a statement it was analyzing its exposure to Russia and Ukraine to understand how to better handle risks in light of the European Union's decision to phase out Russian fossil fuels by 2027. Of the overall loan figure, some 4 billion euros are cross-border, with oil and gas firms accounting for half of the total.

Russian steel and mining company Severstal has received permission from Moscow to make a $12.6 million interest payment due Wednesday on its dollar bonds, but the firm warned that paying and transfer agent Citigroup Inc. may refrain from processing the transaction, Bloomberg reported. “At the moment we certify that there are no obstacles from Russian law side for the company to make the payment,” Severstal said in a Wednesday filing. But, it added, “given the recent developments around the company, we have grounds to believe that” Citigroup won’t process the coupon payment.

Annual inflation in Russia accelerated to 12.54% as of March 11, its highest since late 2015 and up from 10.42% a week earlier, the economy ministry said on Wednesday, with the weakening rouble sending prices soaring amid unprecedented Western sanctions, Reuters reported. Inflation accelerated sharply as the currency fell to an all-time low and amid signs of increased demand for a wide range of goods, from food staples to cars, on expectations that their prices will rise further.

Russia is due to pay $117 million in interest on two dollar-denominated sovereign bonds on Wednesday — the first such payments since its invasion of Ukraine which sparked a raft of sanctions from Western capitals and countermeasures from Moscow, according to a Reuters analysis. Russia's finance ministry said on Monday it had sent an order to a correspondent bank for the payment of coupons on eurobonds amounting to $117.2 million, which are due on Wednesday.

Credit ratings agency Fitch said on Tuesday that if Russia were to make two U.S. dollar bond coupon payments due Wednesday in roubles, it would constitute a sovereign default after a grace period expiration, Reuters reported. Russia's invasion of Ukraine last month triggered sanctions from across the world that have limited Moscow's ability to access and allocate cash. "The payment in local currency of Russia's U.S. dollar Eurobond coupons due on 16 March would, if it were to occur, constitute a sovereign default, on expiry of the 30-day grace period," Fitch said in a statement.

The invasion of Ukraine has placed Russia on the verge of bankruptcy, the Economic Times of India reported. Interest rates have doubled, the stock market has closed, and the rouble has fallen to its lowest level ever. The military costs of war have been exacerbated by an unprecedented level of international sanctions, sustained by a large coalition of countries. Russian citizens, now unable to spend at IKEA, McDonald's or Starbucks, are not allowed to convert any of the money they do have into foreign currency.

Russia's finance minister has confessed that nearly half of the country's foreign exchange reserves, which are viewed as a critical instrument for resisting Western economic sanctions, are insufficient, Wio News reported. According to a report by Interfax, the independent Russian news agency, Anton Siluanov said in an interview with Russian state television on Sunday that Russia had about $640 billion in foreign reserves, with about $300 billion of that amount frozen due to sanctions imposed by the U.S., Europe and other Western nations.