Two Turkish banks suspend payments of Russian Mir after US sanctions According to Reuters

© Reuters. FILE PHOTO: Isbank’s headquarters is seen next to Isbank Towers in Istanbul, Turkey, February 13, 2020. REUTERS / Murad Sezer

By Ebru Tuncay and Jonathan Spicer

ISTANBUL (Reuters) – Loan sharks Isbank and Denizbank have suspended use of Russia’s Mir payment system, the banks said on Monday, following a US crackdown on defendants forced to help Moscow implement sanctions during the war in Ukraine.

The moves, announced separately, come after Washington extended sanctions last week against the head of the organization that runs Mir, which is popular with tens of thousands of Russian tourists who have visited Turkey. Turkey this year.

The suspension of two of the five Turkish banks using Mir reflects their efforts to avoid financial interference between the West and Russia, as the Turkish government takes a balanced diplomatic stance.

Isbank, whose shares fell 10% on Monday, said it had halted payments to Mir and was assessing new US Treasury sanctions. Isbank also said it is keen to comply with national and international laws, regulations and commercial business principles.

When asked for comment, Denizbank said: “We are currently unable to provide services” on Mir. The bank “acts in accordance with international sanction regulations”, it said earlier on Monday.

NATO member Ankara is primarily opposed to Western sanctions against Russia and has close ties with both Moscow and Kyiv, neighbors in the Black Sea. It also condemned the Russian invasion and sent armed drones to Ukraine as part of its diplomatic balance.

However, Western nations are increasingly concerned about the growing economic ties between Turkey and Russia, diplomats said, especially after several meetings between leaders Tayyip Erdogan. and Vladimir Putin, including last week in Uzbekistan.

Last month, the US Treasury Department sent a letter to large Turkish businesses warning that they risked fines if they maintained trade relations with sanctioned Russians.

Turkish Finance Minister Nureddin Nebati at the time called concerns about the letter “nonsense”. In April, he said Russian tourists – vital to Turkey’s perceived economy – could easily make payments because of the growing Mir system between Turkish banks. Ky.

Many Russians have traveled to Turkey since the February invasion leaving them with few other travel options and sanctions have cut off their use of major US credit cards.

Russia called its actions in Ukraine “a special military operation.”

After two private lenders suspended Mir, it was still operated by state-owned lenders Halkbank, Vakifbank and Ziraat.

Istanbul’s banking index plummeted last week and fell more than 9% on Monday, triggering a trading outage. One banker said he was concerned that the so-called secondary sanctions could target Turkish banks or companies affected by the markets.

Extended US sanctions last week targeted the chief executive officer of Russia’s Central Bank’s National Card Payment System (NSPK), the company that runs Mir.

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