Proposed US sanctions will sever financial institutions' ties with Russian banks should Ukraine be invaded: report

• The US is preparing to force financial institutions to sever their relationships with Russian banks, Reuters reported.
• President Joe Biden is set to impose these measures if Russia invades Ukraine.

The Biden administration is preparing to impose sanctions that could hurt Russia's economy should diplomatic talks fail to prevent an invasion of Ukraine.

The proposed package of sanctions — to be imposed if Russia invades Ukraine — would block financial institutions in the US from carrying out transactions for major Russian banks, Reuters reported on Sunday evening, citing three unnamed sources familiar with the matter.

On the same day, President Joe Biden and his Russian counterpart Vladimir Putin agreed to hold a summit on "stability and security in Europe." Biden's one condition for the US' participation in the meeting is that Russia does not invade Ukraine.

The sanctions include placing certain Russian companies and individuals on the Specially Designated Nationals list, per Reuters. Any person or organization on the list will have their assets blocked, while US citizens will be barred from dealing with them, according to the US Treasury Department.

Reuters' sources named VTB Bank, Sberbank, VEB, and Gazprombank as top Russian banks that the sanctions could target.

According to Reuters, the White House hasn't publicly announced plans to force US banks to sever relationships with Russian financial institutions. However, the US has threatened heavy sanctions against Russian industries and top officials, including Putin.

The New York Times previously reported that these measures could potentially upend the Russian economy by inducing severe inflation or a stock market crash, citing several analysts and former top officials.

However, the damage could have a ripple effect on the rest of Europe and even the US, The Times reported. For example, if the US targets Russia's oil and gas industries, fuel prices in America could surge, experts told the outlet.

The goal for Biden is thus to strike against the Russian economy while mitigating the collateral damage that might hit the West, they said to The Times.

Many US financial firms, concerned by the White House's signaling of sanctions, have contacted the Treasury Department's Office of Foreign Assets Control, Reuters reported.

The US Treasury Department did not immediately respond to Insider's request for comment.