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Cyprus-based lender RCB Bank has announced plans to close its banking operations citing the tensions caused by Russia’s invasion of Ukraine.

In agreement with the ECB Banking Supervision, RCB Bank will stop entering new business with respect to both deposits and loans.

The lender plans to transform itself into an asset management firm.

“Although RCB has been, and remains abundant in liquidity and capital, the ongoing and extremely volatile geopolitical situation requires it to transform and adopt a new strategy,” the lender’s statement read.

RCB Bank said that during the transition it will continue to service its existing clients and process all their payment and deposit-related requests.

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It has also promised that it “will proceed with the full repayment of all its obligations towards its clients”.

The sanctions imposed by the US and its NATO allies have particularly targeted Russia’s financial system.

RCB Bank’s decision to close banking operations comes after the European regulators decided to wind down and sell the local operations of leading Russian lender Sberbank, while regulators are weighing the sale of VTB Bank’s operations to prevent potential collapse.

Notably, Russian government-backed lender VTB Bank owned a non-controlling 46.29% stake in the Cyprus-based bank.

According to Interfax’s report, on 24 February 2022, VTB Bank sold its stake to other RCB Bank shareholders to minimise the impact of sanctions’ fallout.

Earlier this week, RCB Bank signed a deal with Hellenic Bank Public Company to sell its performing loan portfolio of up to €556m.

“This action together with the existing high levels of liquidity enables RCB to fully meet its obligations to its clients and retain sufficient liquid assets for further operations after its transformation into an asset management company,” the lender noted.