Yellen’s Warning: Banks Face Heat for Russia Deals; U.S. Sanctions Threat Looms


U.S. Treasury Secretary Janet Yellen

US Treasury Ramps Up Pressure on European Banks in Russia

Amidst growing concerns, US Treasury Secretary Janet Yellen announced that the Biden administration is exploring tougher sanctions against European banks operating in Russia. Yellen emphasized the heightened risks these institutions face and the potential for secondary sanctions if they continue to facilitate transactions that support Russia’s war effort.

“We are reviewing the possibility of intensifying our sanctions on banks engaging in business within Russia,” Yellen stated, without specifying specific targets. She further cautioned that operating in Russia poses “a tremendous amount of risk.”

‘Get Out’ Urge

European Central Bank official Fabio Panetta echoed Yellen’s sentiments, strongly advising Italian banks to “exit” Russia due to reputational damage and potential legal repercussions. Raiffeisen Bank International and UniCredit are among the most prominent European lenders operating in the country.

Secondary Sanctions Authority

President Biden’s secondary sanctions authority empowers the Treasury Department to disconnect foreign banks from the US financial system if they aid in circumventing primary sanctions on Russia. Given Russia’s increasing reliance on a “war economy,” distinguishing between civilian and military transactions has become more challenging.

Treasury Warning Letter to Raiffeisen

Earlier this month, the Treasury issued a written warning to Raiffeisen, highlighting its potential access termination to the dollar-denominated system due to a proposed transaction with a sanctioned Russian tycoon. Consequently, Raiffeisen abandoned the deal, marking a setback for the bank in the wake of the Ukraine invasion.

Washington’s Determination

Yellen’s statements in Frankfurt further underscore Washington’s resolve to hold European banks accountable for their Russian ties. She urged bank executives to intensify compliance efforts and thwart circumvention attempts to avoid severe penalties.

Key Implications

1. Increased Risks for Banks in Russia: Yellen’s warning and the potential for tougher sanctions amplify the risks for European banks operating in Russia, potentially prompting further exits.

2. US Pressure on European Banks: Washington is using its secondary sanctions authority to pressure European banks to terminate their Russian operations or risk being cut off from the US financial system.

3. Russia’s Challenges: The increasing scrutiny and sanctions make it more difficult for Russia to procure necessary goods for its war effort, further straining its economy and strategic goals.


The US Treasury’s intensifying stance against European banks in Russia reflects its determination to curtail Russia’s war efforts. While the full impact of these actions remains to be seen, it is clear that the landscape for financial institutions operating in Russia is fraught with risks and uncertainty. As the conflict continues to evolve, further developments in this area are expected.

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