Putin Ban on Banks Leaving Russia Might Be 'Cover' for Business to Stay

Vladimir Putin's ban on foreign investors and banks from leaving Russia amid the war with Ukraine will effectively provide cover for foreign businesses to continue to operate in Russia, experts say.

"Putin has drawn a line around the massive plans of foreign energy giants to exit the Russian market," National Energy Institute Deputy Director General Alexander Frolov told Gazeta.Ru.

"This measure will help to reduce the unfavorable investment background in the country, which would only intensify as companies continue to flee Russia. Now it will not be possible to escape until the end of December."

The unique order – effectively putting Russian sway over private international businesses – is being seen more as providing a "cover" for the companies to continue to do business in Russia amid sanctions on its war in Ukraine.

For example, Shell gas company has already bore the brunt of the bottom-line hit of leaving Russia, while its competitors can now remain under Putin's decree, according to Frolov.

"Shell pursued the most honest policy since the introduction of anti-Russian sanctions," he told Gazeta.Ru. "They actively sold their assets in Russia, primarily the network of gas stations. The withdrawal from the Sakhalin-2 project jointly with Gazprom stood apart. Due to the peculiarities of negotiations with the Chinese on the sale of almost 30% of the share, there was even talk of a risk of losing up to $5 billion.

"Now, after Putin's decree, Shell's competitors will be able to successfully hide behind this screen, while Shell has already suffered huge losses since the end of February, they can only regret."

Putin reportedly signed an executive order Friday blocking companies in financial or energy sectors from rival countries from leaving until 2023.

Among the companies impacted by the decree are BP, Total, Equinor, Exxon Mobil, and others, according to reports.

But, Presidential Decree No. 520 blocks businesses and banks with investments in Russia from selling their shares to leave the country.

Experts question whether banks and foreign companies will just take the losses of the decree imposed by Putin and still leave the country, because business will be a loss there anyway.

• Russian Defense Minister: 'Soon Soviet Union Will Return'
• Shift in War's Front Seen as Ships Cleared to Leave Ukraine

• Russia Bans Westerners From Selling Key Oil, Bank Stakes