TOKYO: State-backed Japan Bank for International Co-operation (JBIC) will lend about four billion yen ($39 million) to Russia’s Sberbank, which is subject to Western sanctions, in the hope of advancing talks on a territorial dispute, the Nikkei business daily said yesterday.
Sberbank, Russia’s biggest bank, will use the yen-denominated loan to help a company operating the port of Vostochny in the Russian Far East to buy coal-handling equipment.
JBIC will issue the loan by the end of the year in a bid to encourage progress on a dispute over a string of Russia-controlled Pacific islands, called the Northern Territories in Japan and Southern Kuriles in Russia, at a December summit.
“JBIC’s move to provide financing to Russia comes because the Japanese government aims to make progress in the negotiations,” the Nikkei said.
The US and European Union have effectively banned lending to certain Russian companies and financial institutions, including Sberbank, under sanctions imposed after Russia’s 2014 annexation of Ukraine’s Crimea region.
Japanese officials have previously said any economic co-operation with Russia would not run afoul of sanctions.
Japan also bars underwriting of bonds issued by Sberbank and other institutions. Though yen-denominated loans are not covered by the sanctions, Japanese banks are leery of lending in Russia amid concern over the US reaction.
The loan is part of an eight-point economic co-operation plan presented to Russian President Vladimir Putin by Japanese Prime Minister Shinzo Abe in May as part of a “new approach” to the decade-long dispute.
JBIC has started offering rouble-denominated financing this month. To shore up the lender’s capital, the Finance Ministry earmarked 109bn yen in investment in JBIC in the recently approved second supplementary budget for fiscal 2016.