The decision by the EU Commission, approved by Coreper (permanent committee of member country ambassadors to the EU) today, to disconnect from SWIFT seven Russian banks, excluding Gazprom’s bank, suggests a famous comment: “The situation is desperate but not serious” (“Die Lage ist verzweifelt aber nicht ernst; La situazione è grave ma non seria.”) Through Gazprombank, the Europeans pay their gas bill.
The list includes VTB Bank (one of the largest Russian banks), PJSC and Bank Rossiya. However, both Sberbank and Gazprombank are not in the list. This means that Gazprom customers can keep paying for gas supplies through SWIFT and that Russia keeps receiving foreign currency (euros).
In a note to customers written before the list was made known, Zoltan Pozsar, Director of the Global Strategy and Research Department at Credit Suisse, wrote that SWIFT sanctions could provoke a “Lehman moment.”
Poszar is quoted by Zero Hedge, “I’ll never forget the late-night briefing on Friday before Lehman’s bankruptcy where according to one line of argument Lehman’s problems were so widely understood that the system had enough time to hedge itself so that the actual default would be manageable.” Well, he sarcastically continues, “It didn’t turn out like that,” and remarks that “if a bank closes a $200 billion balance sheet on Friday and doesn’t open on Monday, someone’s $200 billion wasn’t hedged by definition.”
