Hungary pulls out of Russia-controlled International Investment Bank

April 14 (UPI) -- Hungary quit the International Investment Bank on Friday, a day after the U.S. Treasury Department imposed sanctions on the Russian-controlled bank and three of its senior executives over the war in Ukraine.

"The Hungarian government has decided to terminate Hungary's membership with the International Investment Bank," the Hungarian Economic Ministry said in a statement.

"Hungary is withdrawing its officials from the IIB."

While the Budapest-based bank had played an "important development role in central and eastern Europe," there was no sense in carrying on with its operations following the U.S. sanctions, the statement added.

The executives sanctioned are former Chairman Nikolay Nikolayevich Kosov and high-ranking IIB official Georgy Nugzarovich, both Russians, and Hungarian national Imre Laszloczki, who is also a high-ranking official of the bank, the Treasury Department said.

The three continued to coordinate with Russian Federation officials on IIB business in breach of sanctions imposed following Russia's invasion of Ukraine in February 2022.

Friday's decision marks a sharp about-turn for Prime Minister Viktor Orban who has been holding out against U.S. demands the country make a clean break from Russia.

The sanctions were triggered Wednesday after the Treasury Department's Office of Foreign Assets Control designated IIB a Russia-controlled financial institution that "opens the door for the Kremlin's malign influence activities in Central Europe and the Western Balkans."

OFAC said the increased intelligence opportunities afforded to Russia by IIB could serve as a mechanism for corruption and illicit finance, including sanctions violations.

Consequently, the Russian government was prepared to step in with guarantees and subsidies to save the bank from a looming default, it added.

OFAC also designated Moscow-based IIB Capital a fully-owned subsidiary of IIB.

The sanctions freeze U.S. funds, property, or property interests of the bank and the three officials, which must be reported to OFAC. Entities that are majority owned, directly or indirectly, by those sanctioned are also frozen and funds may not be transferred or received from the blocked institution or individuals.

The action against IIB is part of a joint U.S.-Britain sanctions offensive launched earlier this week targeting the financial enablers of Russian oligarchs.

The sanctions against 25 individuals and 29 entities connected to the financial network of Russian oligarch Alisher Usmanov aim to prevent Russia from circumventing sanctions and export controls imposed by the United States and its allies in the wake of its invasion of Ukraine.