Russia’s Promsvyazbank opening more branches in annexed regions of Ukraine

Russia’s state-owned Promsvyazbank on Wednesday said it was opening more branches in the four regions of Ukraine that Moscow claimed to have annexed last year, as Russia aims to provide civilians and soldiers with cheap credit and banking services.

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Promsvyazbank (PSB) offers a range of services but has focused on state employees and the defense sector since it was bailed out by the central bank in 2017.

The bank has already bought credit institutions in Ukraine’s Donetsk and Luhansk regions.

Russian President Vladimir Putin moved to annex those, along with the Kherson and Zaporizhzhia regions, last September, following what Ukraine said were sham referendums. The move was condemned by many countries as illegal.

Russian forces only partly control the four regions.

Promsvyazbank Chairman Pyotr Fradkov told Prime Minister Mikhail Mishustin the bank was actively opening branches in what he called Russia’s “new regions”.

“At the moment, more than 400 Promsvyazbank branches are open in the new regions, and it is important to note that this is not just large centers, but 82 settlements, so that banking services can be used by all citizens living on the territory of the new regions,” Fradkov said in their televised meeting.

Fradkov also said Promsvyazbank was a leader in terms of military mortgage loans, having provided 90 billion roubles ($1.1 billion) to 60,000 families of servicemen.

A nationwide preferential lending program entitles eligible applicants to mortgages of 8 percent. In the “new regions”, Promsvyazbank is working on issuing mortgages at 2 percent, as per a government order.

With lenders now jostling for business from the state, particularly a burgeoning defense budget, Promsvyazbank is well poised to benefit.

Fradkov in January told Putin the bank’s loan book growth had tripled in recent years and that it now ranks among Russia’s top five banks, with around 5 trillion roubles in assets.

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