Western banks tightened steel payment options for Russia and Ukraine

Western banks involved in global trade flows have tightened payment procedures for steel deals with Russia and have already taken similar steps for Ukraine due to political instability

Russia's actions in relations with Crimea have caused the biggest crisis between East and West since the Cold War. Despite the absence of hostilities in recent weeks, banks remain extremely cautious in trade and financial transactions.

“Until the geopolitical situation is clear, most banks are keen to reduce risks in Russia as well as in Ukraine. They are worried that the situation could get worse,” said a senior source in the metals industry. "Many of the Swiss and Western banks will now charge 8-10 percent, if not more. Before the crisis, this figure was around 3-3.5 percent."

Sources say BNP Paribas, Societe Generale and Banque Cantonale de Geneve (BCGE) were among the banks that tightened payment rules.

The flow of steel and grain from Russia and Ukraine in the ports has not yet been disrupted. However, banks are reevaluating the risks by canceling lines of credit from some traders. Payment conditions for grain transactions have also been tightened by banks in relation to Russia and Ukraine. In the steel sector, small and medium-sized traders say they have struggled to get advance financing for deals in Ukraine from BNP Paribas, UBS and Credit Suisse.