Russia, Ukraine Officials Meet as Ruble Sinks: Ukraine Update

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(Bloomberg) — A Ukrainian delegation led by the defense minister began talks with Russian officials on the fifth day of an invasion that’s triggered a flurry of sanctions against Moscow and sent Russian markets into a tailspin.

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Ukrainian President Volodymyr Zelenskiy has voiced skepticism that the talks, taking place on the country’s border with Belarus, would yield results but said he was willing to try if it meant any chance of peace.

Russia, which sent a relatively low-level delegation including deputy ministers of defense and foreign affairs, said the talks were underway even as Russian troops continued their assault, including on the outskirts of Kyiv, Ukraine’s capital.

Moscow has set a limited scope for the discussions, which were originally meant to begin Sunday, while Zelenskiy repeated a request Monday for Ukraine to be fast tracked into the European Union.

The talks come after Moscow more than doubled its benchmark interest rate and took other emergency measures to shield its economy from the impact of tightening sanctions. The measures have hit the ruble but also hammered European companies with exposure to Russia and Ukraine.

Key Developments

  • Putin’s Nuclear Threat Has West Wondering Again If He’s Bluffing

  • Russia Hikes Rates to Highest Since 2003, Adds Capital Controls

  • European Gas Jumps as Sanctions Spur Energy Shortage Concerns

  • Oil Soars as More Sanctions on Russia Spur Energy Crisis Fears

  • China’s Muddled Ukraine Response Feeds Rare Domestic Debate

  • EU Proposes Sanctions on Some of Russia’s Wealthiest Tycoons

  • BP to Exit Rosneft Stake and May Take a $25 Billion Hit

All times CET:

FEED:

France to Target Yachts, Luxury Goods Under EU Sanctions (1:17 p.m.)

The government in Paris will scrutinize all financial assets – including real estate, yachts, luxury vehicles – that may belong to wealthy Russians targeted by EU sanctions, French Finance Minister Bruno Le Maire said after a cabinet meeting in Paris. French authorities will be able to seize the property, he said.

Forbes Russia Says Website Hacked (1:30 p.m.)

Several Russian media outlets, including the state-run Tass news agency and Forbes Russia magazine, displayed messages calling on the people of Russia to stop the war in Ukraine when the sites were accessed by Bloomberg News reporters in Russia. Forbes Russia confirmed to Bloomberg News that its website had been hacked.

Kommersant newspaper’s site also appeared to have been compromised but later was accessible.

Over the weekend at least one government agency confirmed its website came under a DDoS attack, while several other official websites appeared to suffer similar disruptions.

Russia’s Default Risk Rises as Sanctions Bite (1:10 p.m.)

The cost of insuring Russia’s government debt rose to a record amid fresh penalties by Western governments that pushed Moscow to take dramatic measures to protect its financial system. On Monday, pricing on credit-default swaps insuring $10 million of the country’s bonds for five years signaled around a 56% likelihood of default, according to ICE Data Services.

That move came alongside a plunge in the ruble and the closure of trading on Moscow’s stock exchange. Elsewhere, European stocks and U.S. futures declined, and commodities surged amid the heightened uncertainty.

EU Says Would be Dangerous for Belarus to Become Nuclear State (1:08 p.m.)

A referendum to grant Belarus the status of a nuclear country is “very dangerous,” because it would mean Russia could position its nuclear weapons inside Belarus, EU foreign policy chief Josep Borrell said.

“This is a very dangerous path,” Borrell said, adding he called on the Belarussian people to protest against the decision and also to protest against aggression from Belarus into Ukraine.

Japan to Restrict Trading with Russian Central Bank (12:47 p.m.)

Prime Minister Fumio Kishida said his administration will restrict trading with the Russian central bank, the Kyodo news service reported. Kishida said he had spoken with Zelenskiy and that Belarusian President Alexander Lukashenko would also be subject to Japanese sanctions.

More Than 500,000 Refugees Have Fled Ukraine, UN Official says (10:42 a.m.)

The number of people fleeing Ukraine since Russia’s invasion began has crossed the half-million point, Filippo Grandi, the United Nations high commissioner for refugees, said on Twitter. UN agencies said last week the figure could climb to as many as 4 million.

Most of those have crossed into the EU, where the four member states bordering Ukraine have registered a surge in arrivals. Poland recorded the most at 281,000 since Feb. 24, while Hungarian officials have counted 85,400. Romania puts the number of Ukrainian citizens crossing into the country at 70,000. Slovakia had taken in as many as 35,000 as of Sunday.

Singapore Joins Sanctions Against Russia (12:30 p.m.)

Singapore’s government will impose unilateral sanctions against Russia, a move which a former diplomat said was the first time in decades that the city-state was penalizing a foreign nation without United Nations Security Council backing.

Singapore plans to impose export controls on items that can be used as weapons “to inflict harm or to subjugate the Ukrainians,” Foreign Minister Vivian Balakrishnan said. Singapore’s biggest banks are also restricting trade financing for Russian raw materials, including on Russian oil and liquefied natural gas, according to people familiar with the situation.

Oil, Gas Prices Surge on Russia Worries (11:50 a.m.)

Energy prices surged as the latest sanctions on Russia increased worries about shortages in markets that are already stretched. International benchmark Brent oil rose as much as 7.3% and European natural gas surged 36%. Among food commodities, wheat jumped as much as 8.7% the war in Ukraine chokes supplies.

While the latest sanctions exclude energy, some customers have stopped buying Russian oil. There are concerns Russia — which supplies about a third of Europe’s natural gas needs — could retaliate by cutting shipments and plunge the continent further into an energy crisis. Targeting the SWIFT messaging system could also bring massive disruption to oil and gas trade flows.

Ruble Plunges 30% as Liquidity Dries Up (11:48 a.m.)

Russian markets are under pressure as the stress of the latest sanctions shakes the country’s financial system. The ruble lost a third of its value at one point Monday and hit an all-time low of 109 per dollar, though pricing was exceptionally difficult amid low liquidity. The currency erased some of its decline to trade 17% weaker at 100 rubles per dollar as of 12:36 p.m. in Moscow.

The Bank of Russia canceled stock trading altogether on the local bourse on Monday.

European Regulators Freeze Sberbank Units (11:23 a.m.)

Regulators froze Sberbank’s main businesses in the EU after determining they were likely to fail in the wake of sanctions. That came after the European Central Bank determined that Austria-based Sberbank Europe AG and its subsidiaries in Croatia and Slovenia probably won’t be able to pay their debts or other liabilities as they fall due.

Europe Freezes Sberbank Units as Sanctions Squeeze Liquidity (1)

Kremlin to Focus on Minimizing Sanctions Impact (11:00 a.m.)

The latest U.S. and European sanctions imposed on Russia are “tough” but Moscow has been preparing for them for years and will focus on minimize their impact, according to Kremlin spokesman Dmitry Peskov.

Putin will meet his top economic officials in the Kremlin later Monday to discuss the situation, Peskov said. Asked about sanctions imposed on the president himself, Peskov called them “absurd and shortsighted.”

Russia will retaliate for the new restrictions, he said, noting but declined to comment on what form that might take beyond saying Moscow will focus on ensuring its own interests are protected.

Europe Defense Stocks Jump After German Pivot (10:53 a.m.)

Shares in European defense companies soared in early trading after Germany said it will increase defense spending in a historic policy shift following Russia’s invasion of Ukraine.

The price of stock in German radar and sensor maker Hensoldt rose 84% and that of Rheinmetall, which makes tactical vehicles, weapons and other defense systems, jumped 40%. Companies including BAE Systems and Leonardo also rose.

Ukraine Asks EU to Accept its Membership Bid (10:51 a.m.)

Zelenskiy asked the EU to immediately accept Ukraine into the bloc. “I am sure it is fair. I am sure we deserve this. I am sure that all this is possible,” he told reporters at a briefing at the presidential office.

Accession to the EU is a long and arduous process, which requires the candidate country to adopt established EU law as well as to enact reforms — including to its judicial and economic systems — to meet the bloc’s criteria. The move also requires the unanimous approval of all EU members, the European Commission and the European Parliament as well as the representatives of all existing member states.

Croatia was the last country to join the EU. It applied for membership in 2003 and was granted it in 2013.

Bulgarian Minister Rebuked for Not Saying ‘War’ (10:34 a.m.)

Bulgarian Prime Minister Kiril Petkov called for the resignation of his defense minister, Stefan Yanev, after the former military official declined to use the word “war” in reference to Russia’s invasion of Ukraine.

The defense chief has repeatedly referred to Russia’s attack as a “special operation,” echoing language used by Putin. He’s defended the terminology by saying he’s avoiding “militant rhetoric” and keeping a path open to diplomacy.

Russia Orders Google to Block ‘Fake News’ (10:30 a.m.)

Russia’s communications watchdog ordered Google to stop displaying advertisements via Google Ads that contain what it called “unreliable information” about the scale of Russian and civilian casualties.

Access to pages that host such posts will be blocked and Russia’s Investigative Committee may seek criminal charges against their owners, Roskomnadzor said in an online statement.

Russia has not disclosed its casualty numbers amid a widespread perception that the army has met tougher resistance than it anticipated. Russia has been steadily increasing pressure on foreign technology companies and, last December, a Moscow court fined Google 7.2 billion rubles for failing to remove banned content

Leased Russian Planes Face Grounding (10:09 a.m.)

Leasing firms are facing the challenge of recalling jetliners worth billions of dollars from Russian airlines, as sanctions imposed over the Ukraine invasion threaten carriers’ ability to operate rented planes.

EU sanctions announced Sunday ban the supply of “all goods and technology” linked to aircraft. Planes can’t be insured, either. That means leasing firms will be required to terminate all contracts with Russian airlines over the next 30 days, said a senior leasing executive with aircraft in the country.

More than half of the active commercial aircraft based in Russia are leased, mostly from companies based abroad, according to analysis from IBA Group, which advises airlines, planemakers, banks and lessors. That tally includes scores of aircraft at flag-carrier Aeroflot.

Leased Russian Planes Worth Billions Face Grounding, Seizure (1)

EU Can Survive Without Russian Gas Next Winter (10:05 a.m.)

The European Union is capable of getting through next winter without imports of Russian natural gas while avoiding serious damage to its economy, according to a new report by Belgium-based think tank Bruegel.

The 27-nation bloc would need to curtail its demand by at least 10%-15% should Russia halt imports altogether following its attack on Ukraine, a transit country for gas flowing to the EU, the researchers said.

EU Could Survive Without Russian Gas Next Winter, Study Says

BNP Paribas Has Residual Exposure (9:37 a.m.)

BNP Paribas said in emailed comments it had 500 million euros in net residual exposures in Russia and Ukraine. It saiod the exposure was a result of the way it secures operations in both markets with guarantees and collaterals. Shares of the lender are down as much as 8.1% in Paris.

Airbnb to House 100,000 Ukrainian Refugees (10:00 a.m.)

Airbnb Inc. is offering free short-term housing for up to 100,000 Ukrainian refugees who are fleeing the Russian invasion of their country and will work with neighboring European states to provide long-term stays.

Leaders from the San Francisco-based company, including Chief Executive Officer Brian Chesky, wrote to the governments of Poland, Romania, Germany and Hungary offering support for housing refugees, according to a statement from Airbnb. The housing will be funded by the company, donors and hosts on the platform. While the crisis is still ongoing, more than 300,000 Ukrainians have left following Russia’s invasion and the European Commission forecasts that the number could grow to millions.

Britain to Ban Interaction With Russian Institutions (9:57 a.m.)

The U.K. Treasury said it will act immediately to stop people and companies doing businesses with the Bank of Russia, the Russian National Wealth Fund and the Ministry of Finance.

Authorities will announce further prohibitions later this week, the Treasury said. U.K. sanctions will also apply to Belorussian individuals and organizations that have supported the invasion of Ukraine. The wider package is designed to hit Russia’s economy and target Vladimir Putin and his inner circle, including Foreign Minister Sergei Lavrov.

Latvia to Allow Citizens to Fight in Ukraine (8:59 a.m.)

Latvia’s parliament voted unanimously to amend its national security law to allow its citizens to voluntarily travel to Ukraine to fight against Russia.

“Our citizens, who want to support Ukraine and voluntarily go there to serve, to defend Ukraine’s independence and our common security, must have the possibility to do so,” Juris Rancans, chairman of the parliamentary committee responsible for the law, said in a statement.

The vote followed a plea by Ukrainian President Volodymyr Zelenskiy for foreigners to join its forces.

Russia Says It Opened Escape Corridor From Kyiv (8:58 a.m.)

The Russian army told Kyiv residents they can leave the capital by a single highway, Defense Ministry spokesman Igor Konashenkov said Monday.

“All civilians located there can freely leaved the capital of Ukraine along the Kyiv-Vasylkiv highway,” Konashenkov said, while warning that the authorities are using people as human shields.

The remarks add to fears that Russia is planning an assault on the city that could result in high numbers of civilian casualties.

WHO Warns on Ukraine’s Access to Medical Oxygen (8:56 a.m.)

The World Health Organization said oxygen supplies were reaching a “very dangerous point” with trucks unable to transport supplies from plants to hospitals across the country, including in Kyiv. The majority of hospitals — which are also facing electricity shortages — could exhaust their oxygen reserves soon, and some have already run out, it said in a statement.

Russia Hikes, Bans Foreigners Selling Securities (8:06 a.m.)

The Bank of Russia more than doubled its benchmark interest rate to 20%, from 9.5%, introduced mandatory hard-currency revenues sales for exporters and banned brokers from selling securities by foreigners starting Monday.

Putin’s monetary authorities rushed to shield the nation’s assets from sweeping Western sanctions, the Finance Ministry also said all Russian companies must sell 80% of their revenue denominated in foreign currencies into rubles.

Earlier Monday the central bank announced a temporary sales freeze on the Moscow Exchange. It didn’t specify which securities the ban applies to. Governor Elvira Nabiullina is due to speak at 4 p.m. in Moscow, the central bank said.

Ukraine Says Russian Forces Seize Berdyansk Port (7:55 a.m.)

Russian troops have seized the Ukrainian port of Berdyansk, according to a statement by military authorities. Berdyansk lies about 75 kilometers (45 miles) west of the Donbas port of Mariupol on the Sea of Azov.

Ukraine’s Economic Arteries Fear a Fresh Hit If War Breaks Out

Daimler Truck Halts Work With Russian Tank-Maker (7:50 a.m.)

Daimler Truck has frozen all cooperation with the Russian vehicle and tank manufacturer Kamaz, Handelsblatt reported, citing the company.

It said no vehicles would be produced by the joint venture and Daimler Truck would not deliver any components to Kamaz. The German company’s parent, Mercedes-Benz Group AG, is looking at how it can split from its 15% holding in Kamaz as soon as possible, the newspaper said.

Belarus Preps to Send Troops to Ukraine: Report (3:57 a.m)

Belarus is preparing to send soldiers into Ukraine in support of Russia as soon as Monday, the Washington Post reported, citing comments from an unidentified U.S. official.

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