New bank created by BRICS countries will not invest in russia due to sanctions

The New Development Bank (NDB), created by the BRICS countries (Brazil, russia, India, China, South Africa) to finance investment projects and which has issued $30 billion in loans over 7 years, will not invest in russia.

Source. This was stated on Wednesday by the head of the bank, Dilma Rousseff, who was the president of Brazil in 2011-2016, Reuters reports.

According to Rousseff, the bank, which was created with russian funds, fully complies with international sanctions and therefore does not consider new projects in russia. Rousseff also called "groundless" the assumption that the bank could continue to work with moscow.

Founded in 2015, NDB received $10 billion from the founding countries – China, India, Brazil, russia and South Africa – and in 8 years of operation has increased its loan portfolio more than 30 times.

But the war in Ukraine and subsequent sanctions against russia hit the bank. Almost two-thirds of the funds raised by the bank were in US dollars. And it proved difficult to refinance these loans: russia's participation in the bank's capital (with a 20% stake) made it "toxic" in the eyes of investors and closed the door to capital markets.

In fact, the NDB turned into a zombie bank and began negotiations with Saudi Arabia, Argentina, and Honduras to raise additional funds. But they showed no interest, The Wall Street Journal reported in June, citing sources familiar with the situation.

In July 2022, Fitch Ratings downgraded the New Development Bank's credit rating, citing difficulties in accessing the dollar bond market.

Background. As a reminder, Western banks refuse to work with russia's Unistream, the last channel for withdrawing money abroad.