Member states could not reach consensus to sanction Sberbank and Gazprombank, which handle energy payments.
As the battle in Ukraine rages, the European Union has made official the list of Russian banks that will be expelled from SWIFT, the high-security system that allows financial transactions and underpins the global economy.
The final list targets seven banks considered to have close links with the regime of President Vladimir Putin and are seen as complicit, either directly or indirectly, in financing the war.
Notably, the ban excludes two of the country's biggest institutions, Sberbank and Gazprombank.
The two were exempted because they handle most of the payments related to gas and oil exports, on which the EU heavily depends to produce energy. Around 40% of the gas consumed by the bloc comes from Russia.
It shows that while EU unity has been consistently strong throughout the crisis, it still bumps into limits when faced with the crucial question of energy supplies.
The expelled institutions are VTB Bank, Bank Otkritie, Novikombank, Promsvyazbank, Rossiya Bank and Sovcombank, as well as VEB, Russia's development bank.
The list was unanimously adopted by member states on Wednesday and will enter into force in 10 days to allow both SWIFT and EU business to adapt to the measures.
"Today's decision to disconnect key Russian banks from the SWIFT network will send yet another very clear signal to Putin and the Kremlin," said European Commission President Ursula von der Leyen in a statement.
Since SWIFT is a Belgium-based company and therefore subject to EU law, the sanctions mean the seven banks will be completely prohibited from using the system to send payment messages to any other bank or institution connected to SWIFT anywhere in the world.
Today, SWIFT, which stands for the Society for Worldwide Interbank Financial Telecommunication, links more than 11,000 financial institutions in more than 200 counties and territories. It sends over 42 million messages per day that facilitate domestic and international business deals.
Although the system is by far the leading intermediary for financial transactions, it is not the only one.
Alternatives to SWIFT include China's CIPS, India's SFMS and Russia's SPFS, as well as more rudimentary methods such as tax and phone messages, which are time-consuming and pose security risks.
About 50% of Russia's bank are connected and use SWIFT, while others rely on SPFS and other bilateral instruments.
All or nothing
Member states have spent the last days discussing who to include in the SWIFT blacklist and how to minimise the economic blowback against the bloc.
During negotiations, over half of member states wanted Sberbank and Gazprombank, Russia's first and third largest banks, to be equally expelled from the electronic system but consensus could not be reached as some capitals expressed their concern, Euronews understands.
The selection was made as a matter of compromise and in coordination with the United States and the United Kingdom. The blacklist will be expanded "at short notice" if the situation in Ukraine further deteriorates, the Commission noted.
Speaking on condition of anonymity, a senior EU official explained the SWIFT ban was an all-or-nothing question: the EU cannot ask the system to ban certain financial transactions while sparing others, such as those involving gas exports. The bank is either expelled or allowed inside SWIFT.
This means that, for the time being, member states will be able to continue buying Russian gas without major disruption, unless the Kremlin decides to retaliate by cutting supplies.
An energy cut-off would inflict great pain on European consumers and citizens but also on Russia's own economy: oil and gas account for 60% of Russia's exports, with more than half destined for Europe.
The sector represents a third of the federal budget revenue.
The war is already putting pressure on the gas market: prices are back above the threshold of €100 megawatt per hour at the Dutch Title Transfer Facility, Europe's leading benchmark.
While extremely high, the price-tag does not come off as a surprise for member states, which have been dealing with a persisting power crunch since late summer, well before tensions at the Ukraine border began to ratchet up.
The effects from the SWIFT switch-off, compounded by other financial sanctions, will be first felt by Russian banks and their clients.
The rouble's value has plummeted to an all-time low, borrowing costs have skyrocketed and the stock market remains closed to avoid a total meltdown.
At the same time, Russian citizens are queuing in front of ATMs in a desperate attempt to retrieve their savings before they are frozen or vanish, as the threat of hyperinflation looms large.
But sparing Sberbank and Gazpromban from the final list might dent the impact of the SWIFT ban. Figures from 2021 showed the two banks had assets worth 37.50 trillion and 7.53 trillion in roubles, respectively.
In comparison, the penalised banks own much less, except for VTB, which is the second largest bank in the country with 18.59 trillion in roubles. Barring VEB, which is a development corporation, the six expelled institutions represent just 25% of the Russian banking system, a senior EU official said.
The measures are also expected to hit the EU's economy, given the considerable trade flows with Russia, but the scope of the damage is still unclear and could be "limited" and "manageable," said Niclas Poitiers, a research fellow at the Bruegel think tank.
"I was surprised by the fact the list is not longer. Compared to other sanctions, this looks very much like a half-hearted measure," Poitiers told Euronews. "I'm not sure what purposes that serves."
In practice, the sanctions might prove easy to circumvent because operators can simply change their accounts to a bank that has not been sanctioned, Poitiers noted.
The SWIFT ban comes on top of a lengthy series of financial sanctions that the EU and its allies have quickly slapped on Russia with the aim of crippling the state's war machine.
Additional measures include, among others, the freezing of foreign reserves owned by the Russian Central Bank, cutting Russian access to the EU's capital markets and a prohibition to provide euro banknotes.
Some of the sanctions will also affect Sberbank and Gazprombank. Put together, the Commission says the measures will target between 70% and 80% of the Russian banking system.