Continued Russian Sanctions - What Does It Mean For EU Banks?

On 22 June 2015 the EU announced it was extending the current Russian sanctions until January 2016 at the earliest. Sanctions generally are a key tool to pursue diplomatic goals on a global basis, at least this is how they are used by the EU and the US. These sanctions have been used by the EU to penalise Russia and Russian entities for their perceived involvement in destabilising the Ukraine.

The EU sanctions target Russia's state finances, energy and arms sectors. Russian state banks are now excluded from raising long-term loans in the EU, exports of dual-use equipment for military use in Russia are banned, future EU-Russia arms deals are banned and the EU will not export a wide range of oil industry technology. The financial sanctions could potentially lead to, amongst other things, cutting Russian state banks off completely from any financial and payment transactions with the EU and US. So how do these work?