Russia approves pumping $6.6bn into state banks

The Russian government has approved injecting 239 billion rubles ($6.6 billion, 5 billion euros) into two of the country's largest, state-controlled banks that have been hit with Western sanctions. VTB Bank will get the lion's share of the funds, 214 billion rubles, while Rosselkhozbank will get 25 billion, according to a decree signed last week and posted Monday on the government website. Both banks were hit by sanctions imposed over Moscow's support for pro-Russian rebels in Ukraine that deny them most access to borrow on Western financial markets. The banks will issue new preferred shares that will be acquired by Russia's National Welfare Fund, a sovereign wealth fund fed by the country's massive oil revenues worth $86.5 billion at the beginning of August. The borrowing restrictions crimp the ability of Russian banks to lend just as flagging domestic demand has choked off growth and the government wants domestic companies to step up investment to reduce reliance on the West. Russia has banned most EU and US food products in response to Western sanctions, which officials said means the farm sector will need nearly $18 billion in additional investment to produce more of the country's food, according to AFP.