Restrictions placed on lending in Russia by the RBS are a response to increasingly tough sanctions being imposed by the EU and the US, aimed at persuading President Vladimir Putin to change his policy on the Ukraine.
After the EU cut off financing for five major Russian banks and the US and the EU imposed a range of other sanctions, RBS has trimmed its lending in Russia by £100 million, thus reducing its own exposure.
RBS is just one of many companies likely to be indirectly affected by the sanctions. BP announced this week that despite increasing profits, the sanctions were a cloud on the horizon, not least because of its 20 per cent stake in Russian energy giant Rosneft.
There is a question about whether the sanctions will work and who they will harm most - Russia, or European businesses and economies. There is little doubt Europe will need to suffer before sanctions have an impact on Russia, the question is how much?
At least there is an honesty about the purpose of EU and US sanctions. Retaliatory trade blocks by Moscow have seen imports from countries such as Poland, Moldova and Ukraine rejected on spurious public health grounds. But it is important to recognise that many Russians see an element of hypocrisy in American and European actions. When the EU says sanctions are meant as a strong warning, adding: "Illegal annexation of territory and deliberate destabilisation of a neighbouring sovereign country cannot be accepted in 21st century Europe," they spot a glaring irony, in the context of Iraq and the reasons given for war there, or the lack of response to what is happening in the Middle East.
The sanctions are designed to rein in a perceived aggression on the part of Mr Putin, targeting a Russian economy seen as weak and putting the country's leader under pressure.
Russian aggression in Crimea has tested Western patience, as has the support for pro-Russian rebels in Ukraine. The downing of the Malaysian Airliner last month has been the final straw. However, it is important to note there has been no direct proof of Russian involvement in the shooting down of the plane.
The deeper question is how have relations with Russia soured to such an extent in a couple of decades since America and the West were held up as the ideal as Russia embraced capitalism? Is there any culpability in Europe and America for the growth of anti-Western feeling?
It is important to ask, because the toughest sanctions since the Cold War have understandably prompted concerns about a new cold war.
The response from Europe has been perceived as weak over Russia's annexing of Crimea,with sanctions late in coming, but the potential costs are high on both sides.
The expectation is that as sanctions bite, Mr Putin will be weakened. Yet the fear must be that rather than strangling the Russian economy and persuading Mr Putin to stop supporting Ukrainian separatists, they strengthen the president's hand, and reinforce resentment among Russia's people.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article