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Barclays wary of Russia
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September 15, 1999: 7:39 a.m. ET
Unclear situation forces bank to close 'meaningful number' of accounts
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LONDON (CNNfn) - Barclays, the British bank, is closing down "a meaningful number" of accounts held by Russians because it can no longer guarantee the money in those accounts has been legally obtained -- or even who is ultimately controlling the accounts.
"It's become very much harder to know who you're dealing with [in Russia]," Alan Brown, director of group risk, told CNNfn.com in an interview Wednesday. "It's more difficult to get to the bottom of what's going on."
Britain's third-biggest bank has closed a lot of the accounts it held for Russians in recent months, mainly in offshore investment centers such as the Isle of Man and the Channel Islands.
For situations in which the bank has "worries" about money in accounts or the ownership of the accounts it has attempted to make further inquiries. In a lot of cases, however, it has had difficulty penetrating the disintegrating Russian economic and financial structure. In these cases, it gives clients 30 days to take their money elsewhere.
The bank is "most of the way through" its analysis of potentially suspect accounts.
Brown emphasized the bank has no blanket ban on Russian accounts, and said he would consider opening new accounts for Russians.
A bank spokeswoman denied the decision to abandon the country was connected to the recent scandal over billions of dollars of illegal money allegedly laundered out of Russia.
Barclays has been scaling back its Russian operations for months, and in June it closed its Moscow representative office.
Russia has proved a painful hunting ground for Western banks in recent years, and for Barclays in particular. Last year's ruble crisis cost the bank more than $250 million as Russia's debt market collapsed.
Another U.K. banker, who did not wish to be named, confirmed that other British banks have scaled back their exposure to Russia and continue to do so. Privately, bankers also warned of the difficulties posed to doing business by the threat of terrorism.
Some banks are effectively out of the market already. A spokeswoman for Lloyds TSB, Britain's second-biggest bank, told CNNfn.com, "We have effectively no exposure [to Russia], it's not an area of concern for us."
A spokesman for HSBC, Britain's biggest bank, refused to comment on the bank's activities in Russia, other than to say "the group has a representative office in Moscow, and it continues to do business."
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