Bank Rossiya became the first financial institution to be sanctioned by the United States over the Crimea crisis last week. The Treasury targeted the bank as it is the “personal bank for senior officials of the Russian Federation” and its “shareholders include members of Putin’s inner circle.” 

Even so, the bank is a strange target. While it is tied to Kremlin officials, it is not a particularly large or powerful institution. It is the 17th biggest lender in Russia. It offers service to 24,000 corporate clients and 470,000 private clients, in a country where the capital city holds 11 million people. Its main asset is the OAO Sogaz Insurance Group, a leading Russian insurance company. The bank is very transparent about their shareholders, as this breakdown is easily available online.

Notable shareholders include Yuri Kovalchuk, who was also sanctioned by the States last week, and Shamalov, who helped to build Putin’s lakeside estate.

Putin’s own association with the bank is murky. An anonymous head of a Russian financial institution said “Everyone knows that it’s Putin’s bank. Therefore it’s a sign, a move in psychological warfare, like they’re telling him: ‘We know everything you’re doing’.” 

Yet officially, Putin’s statement on the bank made him sound unfamiliar with it: “As a financial institution, as I understand it, this is such a medium-sized bank. I personally do not have an account there, but I will certainly open one there on Monday.” 

Bank Rossiya confirmed on their website that Putin had opened an account on Monday, noting that “Putin instructed the Management Department there were transferred his salary.” In a statement issued through the bank, he assured bank customers that the sanction would not affect their savings and investments: “There are no negative consequences – either of the institution or for the bank’s customers.” 

While Putin’s new Bank Rossiya direct deposits might be reassuring to some bank customers, Moscow news media reported that “the problem will affect mostly regular workers. Employees are increasingly asking that their salaries be transferred in cash.” 

The bigger issue with the sanction is the halt of credit card processing by Mastercard and Visa. Since March 20, credit and debit card services to Bank Rossiya have been blocked completely, which also prevents all U.S. dollar transactions from going through. Since this block went into effect, Standard & Poors have moved Bank Rossiya from a “stable” lender to “negative.” The S&P remarked that Bank Rossiya’s “business and financial profiles could deteriorate.” 

The S&P also reported that Bank Rossiya “would likely be supported by Russia’s central bank and it believes that the core deposit clientele, mostly large Russian corporations, will remain in place.”  Some analysts believe this strategy of annoyance, without harsh consequence is intentional: “These sanctions are designed to touch important people close to the Kremlin and have a geopolitical impact rather than a direct effect on earnings at other banks. This has to be perceived as going after the financial conduits for the wealth of the targets,” Hadrien de Belle told Bloomberg News. It won't bring down the Russian economy, but it will a handful of powerful people very annoyed.

Though being marked “negative” by S&P and Fitch Ratings discourages new lending to the bank, the greater power of these sanctions is still up for debate. Overall, the sanction seems to be more of an inconvenience and a blow to citizen morale than a crush to the actual financial institution. While Russia is not yet in an economic tail spin a week into the sanctions, it does seem to be feeling an extremely slow burn. Anton Siluanov, Russia’s finance minister, told the press, “Imposition of the sanctions is definitely a negative for the general perception of our country’s economy.” Sanctions are certainly hurting the idea of the Russian economy, if not the economy itself.