Turkish lenders Isbank and Denizbank have suspended the use of Russia’s Mir payment system, the banks said on Monday after the US cracked down on those accused of helping Moscow evade sanctions over the war in Ukraine.
The separately announced moves come after Washington last week extended its sanctions on the head of the organization that runs Mir, which is popular with tens of thousands of Russian tourists who came to Turkey this year.
The suspensions of two of the five Turkish banks that had used Mir reflect their efforts to avoid the financial crossfire between the West and Russia as the Turkish government adopts a balanced diplomatic stance.
Isbank, whose shares fell 10% on Monday, said it had halted payments to Mir and was reviewing the new US Treasury Department sanctions. Isbank also said it is keen to comply with domestic and international laws, regulations and commercial business principles.
When asked for comment, Denizbank said, “We are currently unable to provide a service” in Mir. The bank “acts in accordance with international sanctions regulations,” it said earlier Monday.
NATO member Ankara is fundamentally opposed to Western sanctions against Russia and has close ties with both Moscow and Kyiv, its Black Sea neighbors. She also condemned the Russian invasion and sent armed drones to Ukraine as part of her diplomatic balance.
Still, Western nations are increasingly concerned about strengthened economic ties between Turkey and Russia, diplomats say, particularly after several meetings between leaders Tayyip Erdogan and Vladimir Putin, including in Uzbekistan last week.
Last month, the US Treasury Department sent a letter to major Turkish companies warning that they risk penalties if they engage in trade relations with sanctioned Russians.
At the time, Turkey’s Finance Minister Nureddin Nebati described concerns about the letter as “meaningless”. In April, he said that Russian tourists – who are vital to Turkey’s struggling economy – can easily make payments as the Mir scheme among Turkish banks increases.
Many Russians have gone to Turkey since the February invasion left them few other travel options and sanctions cut off their use of major US credit cards.
Russia calls its actions in Ukraine “a special military operation”.
After the two private lenders suspended Mir, it is still operated by state lenders Halkbank, Vakifbank and Ziraat.
Istanbul’s banking index fell sharply last week, shedding more than 9% on Monday, causing circuit breakers to halt trading. A banker said he feared so-called secondary sanctions could be aimed at Turkish banks or companies affecting affected markets.
Expanded US sanctions last week targeted the chief executive of the Bank of Russia’s National Card Payments Scheme (NSPK), which operates Mir.