Economic war

UK firms on alert as Russia warns of tit-for-tat attack

Putin ordered attacks on Ukraine airports

British companies and public services are on alert for an economic war with Russia as the Kremlin responds to further western sanctions and is just days from seizing control of Kyiv.

Boris Johnson announced that the assets of all major Russian banks – including VTB – will be frozen, while new legislation will block the state and all the country’s major firms from being able to raise money on London markets.

More than 100 people, entities and subsidiaries will be subject to sanctions, including defence giant Rostec. There will be travel bans and asset restrictions on five more named individuals, though Chelsea FC owner Roman Abramovich was not among them despite evidence showing he has ties to Vladimir Putin.

Steelmaker Evraz, in which Mr Abramovich is the major shareholder, saw its shares slump 74.75p (30.39%) to 172.2p, wiping £300m off his personal fortune.

Among Mr Johnson’s other sanctions was a ban on Aeoroflot planes landing anywhere in Britain, while crucial defence exports of semi-conductors and aircraft spare parts will end.

The Prime Minister aims to exclude Russia from the SWIFT international financial messaging system and the government is aiming to extend all the measures to Belarus, which has joined Russia in the invasion. 

Mr Johnson said it was “the largest and most severe package of economic sanctions that Russia has ever seen”.

Stock markets tumbled, with the FTSE 100 off by almost 4% and the Russian stock market down by more than a third. 

A Russian government minister warned of ‘tit-for-tat’ action as Mr Johnson and Joe Biden led calls to turn up the heat on Moscow following the invasion of Ukraine.

Speculation about what Russia will do in response includes banning flights from western airlines and withholding supplies of titanium which is used in the manufacture of a wide range of products such as jewellery, scissors, bicycle frames, surgical tools, mobile phones and other high-performance products.

Analysts say there is less likelihood of oil and gas supplies being turned off as this would severely hit Russian revenues, though the west could switch demand to other suppliers.

More probable are cyber attacks of the type already unleashed on Ukraine’s banks and public services.Lloyds Bank chief executive Charlie Nunn said preparation for potential cyber attacks was discussed in a meeting between the UK government and the banking industry yesterday.

He added that the firm was on “heightened alert … internally around our cyber risk controls and we’ve been focused on this for quite a while”.

Earlier this week, GCHQ’s National Cyber Security Centre (NCSC) urged UK organisations to “bolster their online defences”.

Ukrainian banking and government websites were last week briefly knocked offline by a spate of distributed denial of service (DDoS) attacks which the US and Britain said were carried out by Russian military hackers – something the Russians denied. 

This prompted concerns that the same sort of attack could now be attempted in the UK.

DDoS attacks try to crash a website by bombarding it with superfluous requests at the same time – and this surge of simple requests overloads the servers, causing them to shut down. 

In order to leverage the number of requests necessary, hackers will often resort to botnets – networks of computers brought under their control with malware. 

Defence Secretary Ben Wallace said the UK will launch retaliatory cyber attacks on Russia if it targets Britain’s computer networks, and that ‘offensive cyber capability’ was being developed from a base in North West England.

It comes after Home Secretary Priti Patel warned over the weekend that the UK Government expects to see ‘cyber attacks aimed at the West’, while NCSC chief executive Lindy Cameron told of a ‘heightened cyber threat’.

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Companies have begun to take their own action against Russia. Allianz disclosed that it had frozen its Russian government bond exposure, while Deutsche Bank said it had contingency plans in place.

Global software company, Ideagen has terminated contracts with all suppliers and customers in Russia in one of the first corporate actions in response to the Ukraine invasion.

Ideagen CEO Ben Dorks said: “Ideagen stands firmly behind the people and nation of Ukraine. With immediate effect, we have terminated contracts with all suppliers and customers in Russia and strongly condemn the actions of the Russian government.

Mr Dorks continues: “We will continue to offer any support we can to our partners in Ukraine and offer our prayers to its people.”

Ideagen’s software helps more than 7,000 companies comply with regulation and manage risk, serving highly regulated industries such as life sciences, healthcare, banking and finance and insurance. Clients include nine of the top 10 UK accounting firms, seven of the top aerospace and defence companies and 75% of leading pharmaceutical firms.

Big brands include Aggreko, BAE, British Airways, Heineken and Johnson Matthey.

See also: BAE Systems shares rise amid Ukraine tensions



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