Russian stocks take a nose dive as MasterCard and Visa stopped providing services to two of Russia’s largest banks on Thursday, including one which is said to serve as a “personal bank for senior officials of the Russian Federation” Reuters reports. This means that Russian citizens will no longer be able to use their credit and debit cards branded with the Visa and MasterCard logo – including to withdraw cash at ATMs. Russian consumers t can still withdraw cash from the banks.
Bank Rossiya, Russia’s 15th largest, was put on the Treasury’s sanctions list following actions put in place by President Obama on Thursday in the wake of Russia’s actions in the Ukraine.
Putin joked that while he didn’t maintain an account at Bank Rossiya, he planned to open one. Russia’s central bank brushed off any implications that these actions would threaten the bank’s stability, but did suggest that Russian government would do what’s necessary to “support the lender and the interests of its depositors and creditors."
Fitch, the ratings agency, warned that the consequences of Visa and MasterCard’s actions may force Russia’s already marginal credit rating (BBB) lower. These actions may impinge the interest of other countries to lend Russia money, potentially increasing its borrowing costs.