BANK’S ROLE MAY EXPAND

Moscow has said its consent to extend the Black Sea grain deal depends on support for its own grain and fertiliser exports. Russia is a major agricultural producer and the world’s largest exporter of wheat.

Ukraine, whose shipments to global markets were blocked by the conflict and Russia’s control of Black Sea waters until July, is one of the biggest suppliers of grains, oilseeds and vegetable oils.

Russia’s resumption of the deal on Nov 2 followed mediation from Turkey, which helped broker the agreement alongside the United Nations.

A Western diplomat briefed on the talks said Turkey had leaned heavily on Russia to stick to the deal and that Rosselkhozbank was a part of the discussions, but not directly related to Moscow’s suspension of the deal or subsequent switch.

Russia’s Foreign Ministry said in September that there was a need to remove Western sanctions from Rosselkhozbank, because it was “serving the lion’s share of all fertiliser and food transactions”.

Swiss banks which traditionally handled the trade have kept their distance since the latest Western sanctions were imposed after Russia invaded Ukraine in February. Before the Ukraine crisis, Rosselkhozbank mainly provided loans to Russian farmers.

Dmitry Patrushev, son of Russian Security Council Secretary and Putin ally Nikolai Patrushev, was the bank’s management board chairman from 2010-2018, and is now Russia’s agriculture minister.

The bank and both Patrushev family members are subject to Western sanctions. The US Treasury has imposed some restrictions on US citizens dealing in the bank’s debt or equity but has not blocked dealings with it.

The Treasury has authorised certain transactions related to agricultural commodities and equipment despite US sanctions on Moscow. It declined to comment on the Russian proposal.