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Russians May Have to Settle for Rubles If U.S. Dollar Ban Hits

Annmarie Hordern, Jake Rudnitsky
A customer uses an automated teller machine (ATM) inside an OAO Sberbank branch in Moscow, Russia, on Thursday, March 28, 2013. Russian lenders and companies had about $31 billion in Cypriot banks by the end of 2012, according to a report earlier this month by Moody's Investors Service, while another $29 billion has been given in loans to Cypriot firms with origins in Russia. Photographer: Andrey Rudakov

Russians with bank accounts in dollars may find they can only make withdrawals in other currencies if new sanctions proposed by U.S. lawmakers take effect.

“I am sure that all the clients of all banks should receive their money back; that’s the principle approach,” VTB Group Chief Executive Officer Andrey Kostin said on Wednesday. “How, in which currency, is a different story.”

The U.S. Senate is considering punishing the Kremlin for alleged election meddling, including a fresh raft of measures dubbed the “ bill from hell .” This could bar Americans from buying new issues of Russian sovereign debt and ban Russia’s largest state banks, such as VTB, from using dollars.

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About 20 percent of Russians’ savings are held in foreign currencies, according to central bank data. The three biggest retail deposit holders -- Sberbank PJSC, VTB and Rosselkhozbank JSC -- all are listed in the Senate’s draft law as potentially facing a ban on dollar transactions.

Sberbank, which holds 45 percent of Russia’s retail deposits, had an outflow of 1.1 percent from individuals’ accounts in August, when calculated at a constant exchange rate. Kostin said VTB didn’t experience any unusual withdrawals last month.

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“We are getting ready for the development of any situation, and definitely I think the Russian banking sector, with the help of the Russian central bank, can stand further sanctions,” Kostin said on Bloomberg TV.

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