Sanctions did not seem to disturb Gazprombank's development too much. In the same 2018 balance sheet, it mentions the opening of 60 new accounts for wealthy clients. Photo: Shutterstock.

Sanctions did not seem to disturb Gazprombank's development too much. In the same 2018 balance sheet, it mentions the opening of 60 new accounts for wealthy clients. Photo: Shutterstock.

Already spared by European sanctions in 2014, Gazprombank will likely not be disconnected from the Swift banking system and although the Russian bank, licensed in Luxembourg since 2013, ticks all the boxes, Germany fears the end of gas deliveries.

There appears to be some leeway when it comes to international sanctions for Russia especially due to its gas supply to Europe which saw 59.2 billion cubic metres transported by undersea pipeline project Nord Stream 1 last year. Germany has dragged its feet in terms of adding Luxembourg's Gazprombank to the list of banks sanctioned by the European Union. 

However, the gas pipelines running from Russia to Germany are not linked to the Luxembourg bank, but to its Swiss sister company, reporting directly to Moscow. The second pipeline project Nord Stream 2, has been halted following the sanctions. It is not clear what will happen to the 1,000-kilometre pipeline that cost $11bn and did not reach the stage of being operational.

 The CSV intends to ask the finance minister, Yuriko Backes (DP), and the commission for the supervision of the financial sector (CSSF) to explain, not the fact that Gazprom's bank is not on the list of sanctions, but how it could have obtained, and still holds today, a Luxembourg banking licence, while its ultimate beneficiaries are problematic.

The Russian bank, which set itself up in Luxembourg at the end of 2013 under the name GPB International and became Bank GPB International in 2015, is well aware that it is navigating in troubled waters. While it no longer published accounts in 2019, 2020 or 2021, in the commercial register, it explained in its 2018 annual report, reviewed by KPMG, that it considers it to be “an entity under the US sanctions” of 2014, but not under European sanctions. “The bank is a European banking institution, and as such must fully comply with the EU sanctions”, from which it is excluded. The company, which employs around 100 people in Luxembourg, also explains that it maintains a permanent dialogue with the CSSF to ensure that the level of risk is sufficient to ensure that the sanctions are respected. The CSSF carried out two inspections that year.

Sanctions did not seem to disturb the bank's development too much. In the same 2018 balance sheet, it mentions the opening of 60 new accounts for wealthy clients and an increase in their deposits of 45%, to €271.2m, as well as a slight increase in medium and long-term deposits to €115.5m, a record increase in corporate deposits of 23%, to €1.2bn, and the issuance of five bonds for Russian clients which raised €650m.

In 2020, according to the latest balance sheet available online, 28 new accounts were created, with assets of €462m, the bank provided over €521m in credit to 318 companies and €862m to institutional investors. .

Member of Luxflag since July

“Gazprombank, which has just celebrated its 30th anniversary and where I have worked since 2008, is now a universal bank, the third largest in Russia,” explained its then general manager, Sergey Belousov, in an interview published in . “People sometimes think of us as a bank serving only Gazprom. Our backbone is corporate banking thanks to strategic partnership with the Gazprom Group. As a universal financial institution, the bank provides services to other important sectors of the Russian economy – nuclear, chemical and petrochemical, ferrous and nonferrous metallurgy, engineering and metalworking, transportation, construction, communications, agriculture, etc. At the same time, the bank is the absolute leader in the number of customers and the volume of portfolios in a number of industry types. In addition, we are active in investment banking and retail banking. The Bank implements a strategy for the development of retail banking, increasing its efficiency due to the active digitalisation of key processes, as well as synergy with corporate banking.”

On 1 July this year, the Russian bank had even joined --set up by the government, Alfi, ABBL, ADA, the European Investment Bank, Luxembourg for Finance and the Luxembourg Stock Exchange.

Since then, the “Best Bond Sales Team” for the fifth year in a row at the Cbonds Awards 2021 has raised $700m for Uzbekistan's Uzbekneftegaz, $2.3bn for Lukoil, or $650m for Metalloinvest.

The Swiss Gazprombank, which does not have ties to the Luxembourg structure, is being investigated by the Swiss Prosecutor's Office, following the Panama Papers revelations, for having failed in its duties in terms of anti-money laundering. It is believed to to manage the accounts of Vladimir Putin, his wife and even Russian foreign affairs minister Sergei Lavrov, which the bank formally denies.

This story was first published in French on . It has been translated and edited for Delano.