(Bloomberg) — Isbank, Turkey’s largest private lender by assets, stopped using a payment system popular among Russian tourists, following a warning by the US.
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Turkiye Is Bankasi AS suspended transactions through the Mir system while the lender assesses the US Treasury’s recent statement, the bank told Bloomberg.
The decision comes after the US Treasury Department’s Office of Foreign Assets Control (OFAC) last week warned financial institutions against entering new agreements or expanding the existing ones with the Russian operator of Mir cards.
Turkey has not implemented sanctions imposed on Russian institutions in response to Moscow’s invasion of Ukraine.
Four other Turkish banks process Mir payments. President Recep Tayyip Erdogan said following an Aug. 5 meeting with Russia’s Vladimir Putin that the system facilitated tourism between the two countries.
The two leaders pledged closer ties and agreed to energy payments in local currencies at that meeting in the Black Sea city of Sochi.
The rapprochement has left some of Turkey’s Western allies worried that Ankara may be getting too close to Moscow, and setting an example for Turkish businesses to follow. The U.S. Treasury already warned Turkish companies that doing business with designated Russian entities and individuals could result in sanctions.
Erdogan has had to navigate a tricky position since the invasion began in February. He’s presented Turkey as a mediator, and he later helped negotiate a deal to resume grain shipments from Ukraine’s Black Sea ports.
While helping to arm Kyiv, he’s also publicly defended Putin against sanctions and urged nations not to “underestimate” Russia.
Erdogan’s relations with Ukraine, including the supply of weapons such as drones, have rankled Moscow. But Ankara remains a key partner for Putin as international sanctions imposed over Russia’s invasion shutter other routes for trade and investment.
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