Russia’s MTS bank has suffered another major blow, with the United Arab Emirates' central bank cancelling its licence to operate in the country.

MTS bank, which was granted licence to operate in the UAE last year, was placed under sanctions from the UK and US in February as part of new swathes of action against Russia.

In a statement published Friday, the Central Bank of the UAE (CBUAE), said that MTS will have six months from the date of the decision – 31 March – to wind down its operations and close its sole branch in Abu Dhabi.

During the winding down process, which will take place under the central bank’s supervision, the branch will be prohibited from opening new accounts and conducting transactions, except for clearing prior obligations and the bank’s use of Central Bank’s payment systems will be restricted to this purpose only, the CBUAE said.

The central bank said: “This decision comes after considering the available options regarding the new status of the MTS Bank, and taking into account the sanctions risks associated with the bank after the designation.”

The news will come as a blow to Russia, which has seen fellow OPEC+ member the UAE as a strong ally during its illegal invasion of Ukraine. The UAE has acted as a safe haven for many Russians who have left the country since the start of the war last year, and the Middle Eastern country has not matched global sanctions imposed on Moscow.

However, US officials have increasingly visited the UAE to discuss its relationship with Russia, and have met with the central bank to discuss the importance of clamping down on sanctions evasion.

MTS Bank is a unit of leading Russian telco Mobile TeleSystems. It was named among 200 businesses and individuals on an expanded package of sanctions against Russia to coincide with the first anniversary of its invasion of Ukraine.

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