The Kremlin acknowledged on Wednesday that the Russian economy is taking a "serious hit" as the country's growing isolation has put further pressure on its crumbling financial system.
Apple (AAPL), ExxonMobil (XOM), Ford (F), Boeing (BA) and Airbus (EADSF) join the list of companies that have closed their operations in Russia in response to their invasion of Ukraine and Western sanctions. Or was suspended, and the European branch of Russia's largest bank collapsed after a run on its deposits. The ruble again weakened and was trading at USD 112.
Kremlin spokesman Dmitry Peskov told foreign journalists, "Russian economy has suffered a serious blow." "But there's a certain margin of safety, there's potential, there's some planning, work is going on."
Peskov was responding to a question about US President Joe Biden's remarks in his State of the Union speech that the Russian economy had been "disturbed" by sanctions.
Russia's largest lender Sberbank (SBRCY) said on Wednesday it was leaving Europe, with the exception of Switzerland, after banking regulators in Austria were forced to close its Vienna-based EU subsidiary. The European Central Bank warned earlier this week that Sberbank Europe was likely to fail to help depositors withdraw their money after imposing Western sanctions on much of Russia's financial system.
Sberbank said its subsidiaries faced "an extraordinary outflow of funds and a number of security concerns regarding its employees and offices," the group said in a statement, calling it an order of the Russian central bank from bailing them out. was stopped.
The banking sanctions are part of a broader package of measures taken by the West on an unprecedented scale against an economy of importance to Russia, aimed at cutting funding for Russian President Vladimir Putin's war effort. France is estimated to have confiscated Russian assets worth $1 trillion, including nearly half of the Russian government's war stockpile.
Moscow has responded to a series of emergency measures aimed at halting a financial meltdown, halting cash flows out of the country and preserving its foreign exchange reserves. The central bank more than doubled interest rates to 20%, and banned Russian brokers from selling securities held by foreigners.
More capital control
The Russian stock market was closed on Monday and has not reopened since. The central bank said it would remain closed on Wednesday. The government has ordered exporters to exchange 80% of their foreign exchange revenue for the ruble, and banned Russian residents from making bank transfers outside the country.
On Tuesday, the government said Putin was working on a decree that would prevent foreign companies from exiting their Russian assets - a bid to halt the exodus that gained momentum this week. State news agencies TASS and RIA reported that Putin also signed a decree banning the taking of foreign currency from the country to $10,000 or its equivalent.
The central bank on Wednesday went further in its effort to stop the flow of money out of the country. It suspended transfers abroad from accounts of non-resident corporate entities and individuals in multiple countries. The ban does not apply to Russian citizens.
Berenberg Senior Economist Kallum Pickering wrote in a research note, "The condition of the Russian financial system and the broader economy is likely to worsen in the coming days and weeks as the already announced sanctions take their toll and future sanctions continue to grow." Negatives add to the trauma." Wednesday.
"For the foreseeable future, Russia will remain isolated from the Western world and major global markets."
Oil companies lead corporate exodus
Russia's energy wealth has not been directly targeted by Western sanctions, but many of the world's biggest oil companies are leaving the country or halting new investment in projects to explore and develop the fields.
Moscow is also finding it difficult to sell shipments of Russian crude oil to traders and refineries worried about being mired in financial sanctions. Tanker operators are also wary of the risk to ships in the Black Sea.
ExxonMobil said on Tuesday it was abandoning its last project in the country, Sakhalin-1 - which was billed as "one of the largest single international direct investments in Russia". An Exxon subsidiary was the operator of the project, and the company's decision to walk away would end its presence in Russia for more than 25 years.
BP, Shell (RDSA) and Norway's Equinor said this week that they intend to exit their Russian business, which could put billions of dollars in losses on their balance sheets. France's TotalEnergies (TOT) has stopped new investments.
Apple, the world's most valuable company, announced on Tuesday that it has stopped selling all its products in Russia due to the invasion of Ukraine. Apple also said that it has limited access to digital services such as Apple Pay inside Russia, and restricted the availability of Russian state media applications outside the country.
Ford said on Tuesday it was suspending its operations in Russia with immediate effect. The carmaker has a 50% stake in Ford Solars, a joint venture with Russian company Solars.
Boeing is suspending support for Russian Airlines. A company spokesman said Tuesday that Boeing was halting "parts, maintenance and technical support services for Russian Airlines", and "suspending major operations in Moscow and temporarily closing our office in Kyiv". "
Airbus also said it was suspending support services and spare parts supplies to Russian airlines.