China's President Xi Jinping (L) and Russia's President Vladimir Putin attend a meeting with members of the Business Council and management of the New Development Bank during the Brics Summit in Brasilia, 14 November 2019. Picture: AFP.
The New Development Bank (NDB), established in 2015 by Brics countries (Brazil, Russia, India, China and South Africa), has stopped doing business with Russia amid its military intervention in Ukraine.
The move by the NDB follows crippling economic sanctions already imposed on Russia by the world’s Western powers since its invasion of Ukraine started on 24 February.
In a short statement issued by the NDB, on 3 March, the financial institution said in light of the “unfolding uncertainties and restrictions” caused by sanctions imposed on Moscow, the NDB decided to put new transactions in Russia on hold.
“The NDB applies sound banking principles in all its operations, as stated in its Articles of Agreement.
“NDB will continue to conduct business in full conformity with the highest compliance standards as an international institution,” the bank said.
The NDB was established by Brics countries to mobilise resources for infrastructure and sustainable development projects in Brazil, Russia, India, China and South Africa and other emerging economies and developing countries.
The bank, which has an authorised capital of US$ 100 billion, was also set up to complement the existing efforts of multilateral and regional financial institutions like the World Bank for global growth and development.
Meanwhile, card payment giants Visa and Mastercard announced at the weekend they would suspend operations in Russia after 9 March, the latest major US firms to join the business freeze-out of Moscow over its invasion of Ukraine.
“Noting the unprecedented nature of the current conflict and the uncertain economic environment,” Mastercard said it had “decided to suspend our network services in Russia.”
Russia’s central bank said some local lenders would look to use China’s UnionPay system instead.
The central bank in recent days has taken unprecedented measures, including capital controls, to shore up the struggling economy and Russia’s ruble.
The national currency has shed around a quarter of its value against the US dollar since what the Kremlin has dubbed “a special military operation” in Ukraine which began last month.
The tanking ruble has revived memories of the financial turmoil of the 1990s, when millions of Russians saw their savings evaporate due to currency devaluation and soaring inflation.
Compiled by Thapelo Lekabe. Additional reporting by AFP.
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