Reuters is reporting Raiffeisen Bank Aval, a subsidiary of Raiffeisen Bank International, will close their branches in Crimea due to uncertainty of business now that Russia is in control of the peninsula.
Four representatives at Aval in Kiev told Reuters that it is impossible for the bank to continue its operations for geopolitical and legal reasons.
“Because of the changes in the region’s geopolitical situation, there has been a decision to close the branches,” one representative said on conditions of anonymity.
The impact of Russia’s annexation of Crimea on companies with assets in the peninsula is yet to be fully estimated, but many banks have closed and many worried businesses have switched to cash-only operations.
Another Aval representative told Reuters there are too many differences in Ukrainian and Russian laws for the banks to stay open. Crimea went to the Russian ruble at the beginning of April.
Russian banks fear sanctions from the West if they move into Crimea. President Obama passed harsh sanctions against Russian President Vladimir Putin’s inner circle and his preferred bank, Bank Rossiya, in St. Petersburg. The West promised more sanctions if Russia makes the situation worse with Ukraine.
Russia’s lower house of parliament, the Duma, is working on a bill that would give the central bank the right to close Ukrainian banks in Crimea that refuse to meet their obligations to customers.
McDonald’s announced they were closing restaurants in Crimea. The Ukrainian website said they would help employees move to Ukraine’s mainland and even pay for rent the first three months. If an employee decides not to move to Ukraine, McDonald’s will compensate their salary and help them find a new job.