VTB Bank, a state-owned financial institution in Russia, is closing its only African branch, Banco VTB Africa, due to the impact of international sanctions. These sanctions were imposed by Western countries in response to Russia’s actions in Ukraine. The bank has also been disconnected from the global SWIFT payment system, which has further hampered its ability to conduct international business.
Closing Banco VTB Africa
Banco VTB Africa, which was established in Angola in 2007, was the only African branch for VTB Bank. However, due to the restrictions placed on Russia by Western nations, VTB is now forced to shut down this subsidiary. Andrey Kostin, the head of VTB Bank, confirmed that the bank is voluntarily surrendering its banking license. This action, which Kostin called a “voluntary-compulsory” surrender, means that VTB Bank can no longer operate in Africa.
The closure is a direct result of VTB Bank being cut off from the SWIFT system, which is essential for global transactions. Without access to SWIFT, Banco VTB Africa cannot carry out the everyday banking operations that it once did. This has left the bank with no choice but to freeze its activities and close down its operations in Angola.
The Connection to Angola’s Diamond Industry
Banco VTB Africa had strong financial ties to Angola, particularly in the country’s diamond industry. The second-largest shareholder of the bank was Endiama, Angola’s state-run diamond mining corporation. Endiama plays a central role in the global diamond trade, and this partnership helped Banco VTB Africa maintain its presence in Angola’s economy.
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However, with the new sanctions imposed on VTB, it became increasingly difficult for the bank to continue its operations. Andrey Kostin met with the President of Angola, João Lourenço, to discuss how to handle the situation, but no agreement could be reached. As a result, Banco VTB Africa is being forced to close, marking a significant setback for VTB Bank’s business in Africa.
VTB Bank Faces Similar Problems in Europe
The challenges faced by Banco VTB Africa are not limited to Africa. VTB Bank has also encountered serious difficulties in Europe, especially in countries like Germany and the United Kingdom, as well as in other regions that were once part of the Soviet Union. The bank’s European subsidiary, VTB Bank Europe, was hit hard by sanctions. In 2022, VTB lost control of VTB Bank Europe when German regulators removed VTB from managing its European operations. Despite VTB Bank Europe not being directly under EU sanctions, the broader restrictions on VTB made it impossible for the bank to maintain control over its European assets.
Bank’s Struggles in Other Regions
VTB Bank’s troubles have extended beyond Europe as well. The bank has also had to close its operations in Georgia, another country where it once had a strong presence. These closures are part of the broader impact of the sanctions on Russian businesses, which have led to the loss of key international relationships.
In addition to these financial setbacks, VTB Bank and its CEO, Andrey Kostin, have faced accusations of sanction violations. The United States has accused Kostin of money laundering and violating sanctions, including the ownership of luxury yachts and real estate in the U.S. These legal challenges have further complicated VTB Bank’s operations and made it harder for the institution to stay afloat in international markets.
The closure of Banco VTB Africa serves as another example of the increasing difficulty Russian banks face in maintaining operations outside of Russia. With the ongoing sanctions and the loss of key international banking systems, VTB Bank’s ability to operate globally is severely limited, affecting both its business and its international partners.
