VTB Capital, the investment banking arm of VTB, Russia's second biggest bank last week lowered a large Russian flag at its palatial building opposite the Bank of England in London's financial district, signaling a retreat from one of the main global centers for money flows.
Hours earlier, Britain had said it was freezing the assets of Russia's largest investment bank as punishment for Moscow's invasion of neighboring Ukraine, as part of what the government said is its largest-ever package of sanctions.
Britain has targeted Russian banks and members of President Vladimir Putin's closest circle, imposed a ban on Russia selling debt in London's markets and limited deposits by its citizens.
These moves could signal the end of 'Londongrad' as the Western capital of choice for the Russian oligarchs where an estimated 60% of Russia’s wealthiest have found financial refuge.
Britain is also moving to lift the veil of anonymity for Russian owned shell corporations used to purchase property in the UK. However, it has yet to disclose plans on limiting the Oligarchs access to the financial services of tax havens in British territories such as the Cayman Islands and the British Virgin Islands.
London has also been the go-to venue for foreign capital-raising by Russian firms, many of which craved a listing to gain international financial respectability, and more than 20 of them, with a total market value of more than $536 billion, are listed on the London Stock Exchange.
Britain said the bank, which raised tens of billions of dollars for the Russian government and state-owned companies through London's markets, was being targeted because it was controlled by the Russian state. It has given VTB Capital 30 days to wind down any positions, indicating an exit door for Russian capital.
The exact scope of the new sanctions will only be disclosed in legislation this week and most of the names of the 100 Russian oligarchs and entities Britain has promised to target have not been revealed.