Analysts are concerned that growing tension between the west and Russia over Crimea and the Ukraine may lead to more sanctions being imposed on Russian banks.

The sanctions in turn could disrupt international banking, especially in Europe, due to problems with unpaid letters of credit (L/Cs) and bad loans.

Sanctions impact

Bank Rossiya is so far the only Russian financial institution to have US sanctions imposed on it due to the crisis over Crimea.

The sanctions have already had an impact, with the Russian bank advising its clients to steer clear of foreign currency transactions.

Wider impact

MasterCard and Visa meanwhile have already suspended dealings with Bank Rossiya as well as several other Russian banks.

The US Treasury Department said it had imposed sanctions on Bank Rossiya because it was owned by a member of President Vladimir Putin's inner circle and serves as a personal bank for senior Russia officials.

Sever disruption

If sanctions such as those imposed on Bank Rossiya are applied to more banks, then transactions in Europe's banks could be severely disrupted according to London-based insurance and advisory company, JLT.

Its head of credit and political risk analysis, Elizabeth Stephens, reckons that unpaid L/Cs and underperforming loans could "snarl-up European banking" while investors could postpone or cancel energy projects in Ukraine.

Chevron, Shell, and BP have negotiated big contracts to develop Ukraine's gas fields.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.