Regarding why the bank has only now appeared on the sanctions list, how this will affect gas exports, and whether it could undermine Russia's capacity to conduct warfare, read the article by RBK-Ukraine. This information is also reported by Kontrakty.UA.
Sanctions against "Gazprombank": what is known
Since the onset of the full-scale invasion of Ukraine, Western countries have imposed sectoral sanctions against Russia, freezing the central bank's assets amounting to $300 billion and disconnecting it from the international payment system SWIFT.
However, only in the third year of the war did "Gazprombank"—the largest bank that previously had not faced the strictest sanctions—get added to the blacklist. These sanctions entail blocking restrictions, specifically isolating it from the dollar system.
It should be noted that since spring, "Gazprombank" has been facilitating ruble transactions for gas with "unfriendly countries". Additionally, military equipment is procured through the bank, and salaries for soldiers, including combat bonuses and compensation for the families of those killed in the war against Ukraine, are also paid through it.
As stated by the U.S. Treasury, sanctions against this bank, dozens of other financial institutions, and officials will "further weaken Russia's military machinery." A warning has also been issued regarding the risk of sanctions for foreign banks that join the Russian financial messaging system (SPFS, an alternative to SWIFT).
As a result, foreign banks have stopped servicing cards from the Chinese payment system UnionPay issued by "Gazprombank". The cards ceased functioning in 16 countries, including Kazakhstan, Turkey, Hungary, Greece, and Egypt. The option to apply for a UnionPay card (the only means for transactions abroad) has been removed from the bank's website, and the app has been deleted from the App Store.
Gas prices in Europe have reached a yearly high, soaring to $538 per thousand cubic meters. Slovakia is assessing the potential impact of the sanctions against "Gazprombank" on the country, while Hungary has already stated that it is working on addressing the issue. Both countries purchase Russian pipeline gas.
The head of the National Bank of Ukraine, Andriy Pyshny, called this package one of the most extensive. "Every point is a result of relentless negotiations between the Ukrainian team and the U.S. sanctions team," he wrote on Facebook.
He also pointed out that subsidiary banks in Switzerland, South Africa, Hong Kong, Cyprus, and Luxembourg have fallen under the restrictions. Furthermore, the President of Ukraine's authorized representative on sanctions policy, Vladislav Vlasuk, believes that Russia's financial system will soon experience a shock. According to him, Moscow will attempt to reroute payments to smaller banks, but this will merely slow down the process rather than prevent the storm.
"Therefore, I think Ms. Elvira (the head of the Central Bank of Russia, Elvira Nabiullina) has been sleeping poorly for the past few days," he added.
Will sanctions against "Gazprombank" halt exports to Europe?
New sanctions against Russia may close the only payment method for gas supplies to European clients and bring Moscow closer to Beijing's orbit, writes Reuters. Whether this will happen remains uncertain; Deputy Energy Minister Pavel Sorokin declined to comment on whether "Gazprombank" will continue to receive payments from Europe.
The sanctions include a wind-down period for operations involving "Gazprom" until December 20, 2024, and operations related to the Sakhalin-2 oil and gas project until June 28, 2025. The Japanese government considers this project crucial for its energy security.
The U.S. kept a loophole open until the last moment since the bank played a key role in the energy market, reports Bloomberg.
Now, however, the sanctions increase the risk of a complete halt of Russian gas flows to Europe. The need for exceptions for "Gazprombank" has diminished after European countries ramped up liquefied gas supplies from the U.S. This country is already the largest supplier of LNG to Europe, but imports from Russia remain in second place.
Since 2022, Moscow has demanded that European countries pay through a scheme requiring currency conversion into rubles. Buyers were required to open two accounts in "Gazprombank": one in rubles and another in foreign currency. Poland and Bulgaria refused and were cut off from supplies, while Hungary and Slovakia continue to receive gas. However, it seems they now need to find another intermediary.
Hungarian Foreign Minister Peter Szijjarto called U.S. sanctions "an attack on Hungary's sovereignty." His ministry stated in response to a Bloomberg inquiry that it will continue to ensure energy supply regardless of external pressure.
Theoretically, Putin could allow payments for gas through other banks. However, it is still unclear whether Moscow would want to change the transfer scheme, particularly for foreign transactions.
"There is a likelihood that some transactions may be disrupted, leading to delays and even reductions in gas supplies. "Gazprombank" continues to play a vital role in processing payments for the export of Russian gas to Europe," believes Florence Schmitt, energy strategist at the Dutch Rabobank.
According to her, delays or interruptions in supplies could impact prices in Europe and close "the already narrow window of opportunity for any transit of Russian gas through Ukraine in the new year."
Could this undermine Russia's ability to fight against Ukraine?
As stated by U.S. National Security Advisor Jake Sullivan, the new sanctions aim to further undermine Russia's ability to utilize the international financial system to support its war against Ukraine.
The U.S. Treasury Secretary Janet Yellen made a similar statement. "These extensive actions will complicate the Kremlin's attempts to evade U.S. sanctions, finance, and equip its army," she said.
It is likely that the outgoing administration decided to deliver a final sanctions blow to support Ukraine in anticipation of pressure from the elected President Donald Trump on both sides to reach a peace agreement or ceasefire.
It should be noted that Trump's return to the White House in January and his promise to end the war as soon as possible have raised concerns among Ukraine's Western partners, who are interested in its strong position. Meanwhile, the Kremlin claims it is ready to discuss a potential ceasefire "considering the realities on the ground."
"The Biden administration is rushing to impose additional sanctions in its final weeks alongside actions it is taking to send more weapons to Ukraine, such as anti-personnel mines, and to remove barriers by lifting restrictions on the use of ATACMS," explains former U.S. State Department Coordinator for Sanctions Policy Daniel Fried.
Despite this, in recent days, Moscow has intensified its strikes on Ukraine and even demonstratively used a medium-range ballistic missile. Moreover, previous rounds of sanctions over the past two and a half years have not critically undermined Russia's ability to wage war.
In Fried's opinion, sanctions against "Gazprombank" and other banks may complicate the sale of gas and oil, possibly forcing Russians to resort to weaker currencies (not dollars, euros, or pounds sterling) or even barter agreements.
"But they are unlikely to deliver a devastating blow to the Russian economy on their own. If these sanctions were the last similar measures by the Biden administration, I would consider them insufficient given the seriousness of the war... and Russia's successes on the front. Fortunately, I have heard that these are not the last sanctions of the current administration against Russia," the expert added.