Western Banks Cut Off Liquidity To Russian Entities

Western Banks Cut Off Liquidity To Russian Entities (ZeroHedge, Dec 16, 2014):

As Zero Hedge first reported today, shortly before noon one (and subsequently more) FX brokers advised clients that any existing Ruble positions would be forcibly closed out because “western banks have stopped pricing USDRUB“, over concerns of Russian capital controls. Ironically, it was this forced liquidation of mostly short RUB positions that pushed the RUB higher, which in turn had a briefly favorably impact on energy commodities and risk assets, as the market had by then perceived the Ruble selloff as excessive. Of course, since nothing had actually changed aside from a temporary market technical, the selloff promptly resumed into the close of trading once the market finally understood what we had explained hours previously.

And unfortunately for the bulls, various falling knife-catchers, and those who hope the Russian situation will stabilize imminently with or without capital controls, it appears things in Russia are about to get a whole lot worse because as the WSJ reports, the next driver of the Russian crisis is likely to come from within the banking system itself because global banks are curtailing the flow of cash to Russian entities, a response to the ruble’s sharpest selloff since the 1998 financial crisis.”

Presenting Russia’s banks: now cut off from the outside world as the second cold war goes nuclear, at least when it comes to the financial system:

Such banks as Goldman Sachs Group Inc. this week started rejecting requests from institutional clients to engage in certain ruble-denominated repurchase agreements and other transactions designed to raise cash, according to people familiar with the matter.

Bankers and traders say the moves to restrict some ruble transactions have become increasingly widespread among major Western financial institutions this week, even as the same institutions continue to try to profit from the ruble’s wild swings. The moves, which the banks are deploying to protect themselves against further swings in the currency, have the potential to add to the strain on Russia’s financial system.

Goldman in recent days largely stopped doing longer-term ruble-denominated repurchase agreements, or repos, in which securities or other assets are swapped in exchange for cash, said a person familiar with the matter. The Wall Street bank is still doing short-duration ruble repos, those that mature in less than a year, this person said.

And where Goldman goes, everyone else follows, even though according to the WSJ this has not happened, yet:

Other banks, including Bank of America Corp. and Citigroup Inc., haven’t changed their trading with Russia or in rubles, according to people familiar with those banks.

They will, it is only a matter of time. Meanwhile, the entire Russian capital market, and not just its currency, is becoming isolated from the rest of the Western world:

In one sign of the banking industry’s hasty retreat, the London-based manager of an emerging-markets hedge fund said Tuesday that he couldn’t get any banks to trade Russian government bonds with him.

Of course, anyone who read our article in early November explaining “How The Petrodollar Quietly Died, And Nobody Noticed“, predicting the crunch in global intermarket liquidity as a result of the collapse in crude, would know this is coming. As for the death of the Petrodollar we warned about, a death which has resulted in the disintegration of market volume just as warned, suddenly everyone is noticing.

Regardless, what all of the above means is that Russia now has at best a few weeks in which to find an alternative source of short-term funding. One coming from the East.

The question is will Putin swallow his pride and proceed with the next logical step as the Eurasian axis realizes the time to abandon the dollar has long past, that now only actions matter and not words, and joins forces with China in a new monetary union, one which combines the Ruble and the Yuan, and is backed by China’s gold and Russia’s natural resources, as cheap as they may be for the time being… until one or more of the largest middle-east oil exporters experiences a major and “unexpected” geopoolitical incident, one which sends the price of oil soaring right back up.

 

7 thoughts on “Western Banks Cut Off Liquidity To Russian Entities

  1. So, now, over five years after the game started, the US is declaring financial war on Russia. Isolating them from greedy guts like Goldman, and other such sterling enterprises.

    I will be interested to see what China, India, the middle east, and all the other nations who have joined BRICS will say. Gee, you think they will go back to the dollar, and US financial domination?

    Some are even hoping for a Russian default. One of the US propaganda channels were showing Russians protesting…………..there were three of them………Does anything Putin has done to date indicate he will fold?

    I would be more likely to think Putin will come out with a gold backed Ruble currency…..he has been stockpiling gold for years, just look at some of the articles on this subject on this website. He was not doing it for nothing, that man does not waste a step.

    If the US is fool enough to invade Russia, most of the world will join them, not the US. It appears they intend to do that………idiots.

  2. One other thing, they are years too late in responding. Less than 30% of the world nations now use the dollar to complete international trades, and none of the ones who have discovered the freedom technology provides in allowing them to trade with their own currencies are going to move backwards.

    Man isn’t going back to the horse and buggy, either. The US has really shut the barn door after ALL the stock is long gone.

    Attacking Russia is playing into Putin’s hands. The Russian people will back him, along with his long line of allies, including, but not limited to China, Japan, India, Iran, Turkey, much of the middle east, including Qatar, and many more.

    The US has no allies but despised Israel. Germany has told the US to stay out of Russia, the UK has refused to support an attack on Russia……..both these countries, along with France, have found alternate ways to trade avoiding the use of the dollar. Attacking Russia will force all nations to pick sides, and most have already chosen……………..and it isn’t the USA.

    No word of this on US media, except the 3 protesters holding signs up in Russian………….I would not be surprised to find they are US actors………..the Russian people are used to suffering to get what they want. Putin has his finger on their pulse………the people are behind him regardless of US lies.

    The US actors posing as Russians said they would not be able to pay their mortgages. Lie #1. The Ruble will still work in Russia……..

    It is too late, you cannot put the genie back into the bottle. The US dollar is finished, none of these countries are going to embrace the 20th century system again.

    I guess a few of them finally woke up. But, they are a day late and a dollar short as my father would say.

  3. So, Citi and B of A are not joining Goldman Greedy Sachs…………
    People finally realizing the death of the petrodollar……………
    Pity they don’t cover any of this on US media…….
    So, other than greedy Goldman, who else is “isolating Russia from the west?”

    The truth is as I have described it for months. The isolated one is the US and the west, not the other way around.

    No indication China or any of Russia’s allies will join this folly.

  4. I agree Marilyn. However, the now triple hit of oil, gold and the currency will test Vlad’s exposure to the external international economics he was dragged into by Reagan.
    To Russia & the Russians, isolation is second nature, so international worthlessness is irrelevant.
    Self sufficiency & the BRICS loyalty will be important as always since the devious zionist Rothschild plan first appeared in the open.
    I hope he switches off all the european gas which will then shine a light on what the jewmericans really care about the EU.

  5. To Squodgy: Good to hear from you, Stanley, it has been a while.
    None of the countries who have found the freedom BRICS offers financially want to go back to US dominated finances. The US dollar is hollow, nothing behind it but ink. The US so abused their status as world reserve currency, they printed nonstop for years, and an alternative had to be found.

    Putin took Hugo Chavez’s system for the South American Trade Alliance, and built a world economy on it. The isolated one is the US and to a lessor degree, the EU. He has built an identical system, except for the open basket of currencies, rendering the need for any world reserve currency obsolete. He has cut the underpinnings of US run financial domination, leaving the US dollar as useless. Over 70% of the world no longer uses the dollar in their international trades, as members of BRICS, they can use their own currencies. An electronic currency, based on Hugo Chavez’s Sucre, translates the value of each currency at the time of transaction making the need for any world reserve currency obsolete.
    The truth of this is finally hitting the greedy guts. All they would have had to do was read this site……………oh, well.
    What is interesting to me is the fact the international banks like B of A, and Citibank are continuing to trade with Russia, the only one they can name so far that is not is greedy gut Goldman Sachs……….I hope they collapse.
    The US claim they have isolated Russia is a lie. Russia has isolated them.
    The US would no longer know acknowledge the truth, no matter what, use threats and bombs first.
    If they are fool enough to hit Russia, the rest of the world will join Russia. The US has no moral or military reason to hit them…….and Russia isn’t Iraq.

  6. Again to Stanley: If Putin switches off EU gas it will be to force them into a commitment to BRICS. Germany isn’t going to settle for US invasion of Russia, they have already made that clear. Also, the EU is hurting since Putin pulled back Russian business after the fool sanctions, E120 billion, and the EU cannot afford to do without it to appease a fool demand from the US.
    It is but a matter of days (since the US is determined to attack another country that did nothing to deserve it) before their commitment is made.
    Nobody is going back to the old economic system, the genie is out of the bottle.

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