Ensured the team with ATMs was solidified by Putin.
Russian state-controlled banks are expanding their presence in the disputed Ukrainian territories, despite the region's economic instability and low purchasing power. Sberbank alone operates 48 branches and 130 ATMs in these regions, with plans for further expansion. VTB Bank also plans to open branches in Mariupol by the end of the year.
Russia's invasion of Ukraine led to the control of four regions: Donetsk, Luhansk, Kherson, and Zaporizhzhia. While Russia does not fully control these territories, it continues efforts to capture more. PSB Bank was the first to establish a significant presence, with nearly 400 locations in Donetsk and Luhansk.
The banks' operations are part of a larger strategy to integrate these regions into Russia's economy. Schools are having their textbooks revised, and even banks like Sberbank have opened an office in Crimea, despite suspending activities there in 2014. President Putin encourages businesses to operate in these regions, downplaying the risks of sanctions.
However, many firms are hesitant due to the low purchasing power and high risk. A retail sector source told the "Financial Times" that sensible companies wouldn't go there. Even on Crimea, few companies are active. Western sanctions likely deter firms from operating in these regions.
Despite the economic challenges, Russian companies can still position themselves as "patriotic" firms by operating in the occupied territories. The burger chain Black Star Burger, for instance, has plans to open branches in Mariupol and Kherson. Last year, around 2500 companies were reportedly active in the new territories, though some may have been seized by Russia.
High Risk, Low Reward
The occupation of Ukrainian territories presents businesses with high risks and low rewards. Companies are reluctant to invest due to the volatile political environment and low purchasing power. Protests and violence in these regions often disrupt operations, making them unattractive to foreign investors.
Russian banks, however, see an opportunity to expand their presence in these regions and strengthen their grip on the local economy. They can offer loans and financial services to local businesses, creating a dependency on Russian banks. But the long-term sustainability of these businesses in the face of international sanctions and economic instability remains uncertain.
In recent years, Russia has made efforts to integrate these territories into its economy. This includes revising school textbooks and encouraging businesses to operate in the region. Despite the challenges, many Russian companies are willing to take the risk, considering it as a way to demonstrate their patriotism.
However, the political and economic situation in these regions remains unstable and volatile. The long-term impact of the occupation on Ukraine's economy and its international relations remains to be seen. Businesses operating in these regions will need to navigate the complex political landscape and adapt to the changing circumstances to survive and thrive.
The End
In conclusion, while Russian banks and businesses see an opportunity to expand their presence in the occupied Ukrainian territories, the risks are high, and the rewards are uncertain. The volatile political environment, low purchasing power, and international sanctions pose challenges to businesses operating in these regions. However, the patriotic sentiment in Russia, especially among Russian businesses, is likely to increase their presence in these territories. Ultimately, the long-term sustainability of businesses in these regions will depend on their ability to adapt to the changing circumstances and navigate the complex political landscape.
The attack on Ukraine led to the occupation of four regions: Donetsk, Luhansk, Kherson, and Zaporizhzhia. Despite the high risks and low rewards for businesses due to the volatile political environment and low purchasing power, Russian banks continue to expand their presence in these regions, seeing an opportunity to strengthen their grip on the local economy.
