South Korea sets out sanctions on Russian banks, state bonds

South Korea announced sanctions on Russian banks and other measures on Tuesday, a day after saying it would tighten export controls on Russia and join the West's response to Moscow's invasion of Ukraine.

The finance ministry said it would suspend financial transactions with seven major Russian banks - Sberbank , VEB, PSB, VTB, Otkritie, Sovcom and Novikom - and their subsidiaries subject to U.S. sanctions.

The ministry also "strongly" urged public and financial institutions to suspend participation in both the primary and secondary markets for Russian state bonds issued from March 2.

The announcement comes a day after Seoul said it would ban shipments of strategic items that may include electronics, semiconductors and computers, and added it would join Western countries' moves to remove some Russian banks from the SWIFT international payments system.

In Tuesday's statement, South Korea also said it would immediately implement the SWIFT-related measures once the European Union reveals details of its plan.

"The government will continue to closely monitor the development of the Ukraine crisis and the sanctions against Russia by the United States, European Union and other major economies, and will swiftly decide and implement additional sanctions in line with the international community," it said.

Though local banks' exposure to Russia is only minor, concerns that South Korean financial institutions, importers and exporters and even its nationals in Russia could face payment difficulties are growing.

The local banks' exposure to Russia stands at $1.47 billion as of end-September, accounting for 0.4% of their total external exposure, according to data provided by the Financial Services Commission.