Tinkoff’s entry on the SDN list threatens the bank’s commission income, analysts estimate

MOSCOW, July 21 (Reuters) – Tinkoff Bank, which is part of the TCS group and listed a day earlier on the US SDN list, could see a decline in fee and commission income, mainly due to a potential decline in cross-border transfer income, Renaissance Capital analysts estimate.

Washington on Thursday expanded sanctions against Russia, adding 95 companies and banks to the sanctions list, including Tinkoff Bank, Ural Mining and Metallurgical Company, one of Russia’s largest copper miners, and a number of companies that could help Moscow bypass Kyrgyzstan’s sanctions restrictions, the US Treasury Department said.

Tinkoff Bank said it was prepared for such a turn of events and would do everything to ensure that this news was as little noticed by customers as possible.

Tinkoff Bank, whose 35% stake was bought from Oleg Tinkov last year by Russian businessman Vladimir Potanin, was on the EU sanctions list earlier this year.

“Similar to the restrictions imposed in February and May by the EU and Great Britain, the bank is on the US and Canadian sanctions list, not the parent company (TCS Group Holding PLC) … we expect a negative impact on the dynamics of the bank’s commission income, primarily due to the potential decrease in income from cross-border transfers,” Renaissance Capital analysts wrote.

They also see the following implications for the bank’s perpetual Eurobonds: 1) notes from a certain point (under license to be issued soon) will no longer be settled in the external circuit; 2) if the bank decides to exchange them for replacement bonds, the exchange of securities with safekeeping in foreign deposits will be possible only by way of “assignment of claims”.

Tinkoff advised customers to withdraw cash from bank-issued Union Pay cards as they will stop working overseas from July 21 due to sanctions. In Russia, cards will continue to work as usual.

“We will stop issuing Union Pay cards in the near future due to the decision of the payment system,” Tinkoff Bank said.

“The UK and European Union have already imposed sanctions on Tinkoff Bank earlier this year and we believe the credit institution has put in a lot of effort to prepare for such restrictions and, if possible, to mitigate their negative impact. Nevertheless, the appearance on the US list is a significant negative factor for the company, especially in the light of the principle of extraterritoriality of the new sanctions, which poses a threat to the bank’s relations with partners even from other countries, not only from the United States,” wrote Olga Naidenova, senior analyst at Sinara Investment Bank.

(Elena Fabrichnaya. Editor Dmitry Antonov)