Russian bank Sberbank has said that the cost of trade finance lines to Ukraine is to increase.
Speaking at a news briefing in Moscow, head of trade finance and correspondent banking Andrey Ivanov said: “Risks [over Ukraine] have increased now due to the political instability. The country’s ratings had been revised and naturally we had to correct our estimate of risks related to this type of deal.”
With Ukraine’s risk rating taking a nosedive, the cost of trade finance will increase accordingly, Ivanov said. However, he said that state-backed Sberbank will continue to offer trade finance for business in Ukraine.
The situation in Ukraine has taken a turn for the worse this week. Protestors in the east have seized a number of municipal buildings, demanding unification with Russia. The Ukrainian government has dispatched tanks and troops to dispel them with some commentators warning that all-out war is growing ever-nearer.
Meanwhile, a proxy war is being fought in the energy sector. Gazprom has said that it may draw on its right to switch Ukraine to prepayment for gas deliveries, after Naftogaz failed to pay US$500mn for March’s supply of Russian gas.
RWE, the German company, announced a partnership with Naftogaz which would see gas routed to the country via Poland. The contract signed by the pair will allow RWE to deliver 10 billion cubic metres of gas to the country a year.
The EU has agreed to supply Ukraine with €1bn in trade support, in addition to the €5bn the EBRD has pledged to the country by 2020. The EU will also apply temporary tariff cuts to allow Ukrainian companies to diversify their trade routes toward the union.
“The trade preferences, which will apply from the end of April, will remove about €500mn of EU customs tariffs a year. They cover 94.7% of current EU tariffs imports of industrial goods from Ukraine and all EU tariffs on Ukraine’s agricultural produce exports to the EU,” trade commissioner Karel de Gucht said in a statement, adding that the preferences could stay in place until November 1.