Western sanctions on banks only scratch surface of Fortress Russia | Explained

Here's why the western sanctions on Russian banks after Moscow's recognition of two separatist regions in Ukraine as independent entities only scratch the surface.

The United States, the European Union and Britain announced new sanctions on Russia on Tuesday after Moscow's recognition of two separatist regions in Ukraine as independent entities.

Chief among their targets: Russian banks and their ability to operate internationally.

Yet the impact of the new sanctions is likely to be minimal. Western governments - for now - are preferring to keep the much larger sanctions packages that they have planned in reserve should the crisis escalate.

It means Russian bankers or their Western counterparts with exposures to the country won't be losing much sleep.

Indeed, U.S. banks are not expecting global sanctions to have a major impact on American bank businesses or spark contagion risk, given lenders have little exposure to the Russian economy, said three executives familiar with industry thinking.

Here's how the banks are being targeted and which measures might hit harder:

European foreign ministers agreed to sanction 27 individuals and entities, including banks financing Russian decision-makers and operations in the breakaway territories.