The EU has implemented its tenth sanctions package against Russia. The bloc has excluded three more lenders from the Swift payments messaging system, including Tinkoff Bank, further reducing financial conduits between Russia and the west.

The impact of sanctions has been more limited than western governments had hoped, reflecting the ability of Russia to continue selling oil and gas. But financial restrictions are trapping growing sums of Russian capital uselessly abroad.

Tinkoff has suspended trading in euros. Currency dealing has become hugely lucrative for Russian banks. With about half of its reserve assets frozen, Russia’s central bank has adopted measures to support the rouble, which now lingers at a 10-month low. These include mandatory conversion of a portion of incoming euros and dollars at steep charges, typically about one-tenth of the value of the transaction.

Online bank Tinkoff was expanding beyond its remit of domestic consumer finance and retail payments before the Ukraine war. Fee and commission income there rose 64 per cent in the first three months of last year. That has not helped founder Oleg Tinkov, a critic of Russian president Vladimir Putin, who was forced to sell his stake in the bank last year.

The trading bonanza has bolstered Russian units owned by UniCredit of Italy and Austria’s Raiffeisen Bank. Trading income at UniCredit in Russia rose to €428mn last year from €28mn in 2021. US sanctions enforcers last week flagged concerns about Raiffeisen‘s activities in Russia.

Fewer unsanctioned banks converting euros to roubles means more money trapped offshore. Some $100bn of additional assets from the Russian private sector were present in western banks in the first half of 2022, say researchers at the CEPR. Most was in liquid deposits and currency. The bulk of the increase, some $60bn, was stuck in Belgium.

Financial sanctions are having a similar effect to western arms shipments. They have not routed Russia. But they have left it bogged down, financially as well as militarily.