Ukraine imposes sanctions on Russian state-owned banks

Activists of Ukraine's National Corps party stick placards on the shuttered entrance of a Russian Sberbank branch during a protest in Kiev on March 10, 2017

Ukraine slapped sanctions on Russian state-owned banks operating in the country on Thursday, ratcheting up tensions with Moscow amid a bitter trade war with Kremlin-backed rebels in the east.

Pro-western President Petro Poroshenko approved punitive measures against the Ukrainian subsidiaries of five Russian banks, including state giants Sberbank and VTB, that block them from taking money out of the country.

"Sanctions lasting a year will be applied," Poroshenko's press service said in a statement.

Sberbank and VTB are among Ukraine's 15 largest lenders, with total assets of 68 billion hryvnia ($2.5 billion).

Sberbank denounced the move as "discriminatory" and "politically motivated" in a statement carried by Russian news agencies.

Russian Finance Minister Anton Siluanov meanwhile slammed Kiev for a "short-sighted" move in an interview on state television.

The sanctions come as tensions have spiked between Kiev and Moscow-backed rebels it is battling in the east of the country over trade between the two foes.

Ukraine on Wednesday banned the transport of all goods toward separatist regions after rebels seized firms there in response to a blockade of their territory by nationalist protesters.

Kiev has also been angered by a decision by Moscow to officially recognise identity documents issued by the self-declared rebel republics.

Interior Minister Arsen Avakov last week called for authorities to halt Sberbank operations in Ukraine after it said it would accept the rebel documentation.

The new sanctions are likely to go down well with restive nationalists activists in Ukraine, with far-right groups recently bricking up Sberbank's main office in Kiev in protest.

Ex-Soviet neighbours Ukraine and Russia have been locked in a bitter feud since Moscow seized the Crimea peninsula in 2014 and was then accused of fuelling a separatist conflict that has claimed some 10,000 lives.

A European-brokered peace process to end the war in the east has stalled and there are regular deadly clashes across the volatile frontline.

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