U.S. and European sanctions against Russia are already having a ripple effect beyond their immediate targets, with Visa and MasterCard halting payment transaction services for clients of a bank not even on the blacklist. SMP bank’s co-owners are two of the 20 Russians targeted by U.S. President Barack Obama as he tries to punish Russian President Vladimir Putin for annexing Crimea. The lender described the move by Visa and MasterCard as unlawful. However, financial services firms are wary of doing business with any person or group that can be linked back to Obama’s blacklist. Banks have paid dearly in the past for violating U.S. sanctions on countries such as Iran, and the threat of broader measures against the Russian economy should Putin threaten southern and eastern Ukraine reinforces their caution. The U.S. sanctions forced Russian billionaire Gennady Timchenko to sell his nearly 50 percent stake in Gunvor, the world’s fourth-largest oil trader, this week but their direct effect has generally been relatively minor so far. What bankers and business people fear is an escalation of measures that would choke off international payments and trade, halt investments and stymie deals. Germany’s main trade body warned on Friday that full-blown economic sanctions would be a “real catastrophe”. In a worst-case scenario, Washington would stop banks doing business with Russian counterparts and corporates, similar to the sort of sanctions that were imposed on Iran. Germany’s “wise men” council of economic advisers said this week that the Ukraine crisis was the biggest threat to growth globally, and especially in Germany, because of Russia’s importance of an energy exporter. “What has been announced so far is really nothing. It’s purely cosmetic,” said a French banker based in Moscow. “The biggest risk is tougher sanctions and really the potential impossibility of transfers in U.S. dollars. That will hit trade finance, which depends on correspondent accounts in dollars,” said the banker, who declined to be named because of official sensitivity around the restrictions. “Being able to make payments in dollars is crucial for the Russian economy, which is dependent on energy exports. It would really hurt us domestically.” (Reuters)