Russia to create bank for sanctions-hit defence industry

MOSCOW: Russia announced Thursday the creation of a state-owned bank to finance its defence industry which has encountered difficulties in obtaining financing due to US sanctions.

In a statement the Russian finance ministry said the bank would specialise in "conducting operations related to state defence orders and large state contracts."

Russian media have presented the opening of such a bank as a means to protect the country's other lenders from Western sanctions on Russia's military-industrial complex over the conflict in eastern Ukraine, including recently tightened US measures.

At the end of December, one of Russia's leading private banks, Alfa, said it would stop working with firms in the defence sector because of the US sanctions.

Russian media have said the bank could be created on the base of an existing medium-sized bank.

Without mentioning any details, the finance ministry said in its statement the bank would soon become the property of the state.