Gazprombank Shifts Billions in Foreign Currency to Central Bank 'Haven' from US Sanctions

Russia's third biggest bank is bracing itself for tough sanctions as tensions with the West rise over the Ukraine crisis.

Gazprombank moved almost $7bn to the Russian central bank during March and slashed its deposits in foreign banks where funds can be frozen if Washington and Brussels impose tougher sanctions.

US President warned on Wednesday that the White House had sanctions against Russia "teed up" and was ready to implement them at short notice.

In early April Gazprombank's foreign currency deposits at the central bank were much higher than those of other big Russian banks. Gazprombank's movement of funds was revealed in data published by the central bank.

Speaking to Reuters, banking analyst Maxim Osadchy said it was a "unique event" as the bank rarely used its account with the central bank for foreign currency operations.

"This could show that Gazprombank was using the foreign currency correspondent account at the central bank as a sort of haven from sanctions."

The move is part of a broader set of actions by Russian banks to repatriate funds as they prepare for sanctions that the White House has said could be imposed within days.

These penalties could be imposed against individuals, financial services, as well as the energy, mining and defence sectors.

Washington and Brussels first imposed sanctions against a number of individuals with close ties to the Kremlin as well as a Russian bank, in the wake of Russia's annexation of Crimea.

Moscow seized the territory from Ukraine after a disputed referendum which Western leaders described as "illegal". Those sanctions prompted the Russian rouble to shed its value and exacerbated capital flight from the country.

The crisis over Ukraine has escalated in recent days, as Russian troops began military exercises along the Ukrainian border on Thursday. The troop movements came amid reports that Ukrainian troops had killed five pro-Russian militants in the east of the country.

Russia, Ukraine, the US and the EU reached an agreement in Geneva last Thursday, designed to quell incipient conflict across the region. However, the deal has not been implemented on the ground and tensions remain high.