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The European Union, United States and their allies have agreed to cut off a number of Russian banks from the main international payment system, SWIFT.

A German government spokesman said: “This is intended to cut off these institutions from international financial flows, which will massively restrict their global operations.”

Russia is heavily reliant on the Swift system for its oil and gas exports.

However, the move could also harm Western businesses doing business with Russia.

The Society for Worldwide Interbank Financial Telecommunication (SWIFT), is a secure messaging system that makes fast, cross-border payments possible, enabling international trade.

The banks set to be affected are “all those already sanctioned by the international community, as well as other institutions, if necessary”, the German spokesman said.

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Ursula von der Leyen, president of the European Commission, said the allies would stop Russia from “using its war chest,” by paralysing the assets of its central bank. They also agreed to freezing its transactions and prevent the central bank from liquidating its assets.

She added there would be a crackdown on so-called “golden passports” that “let wealthy Russians connected to the Russian government become citizens of our countries and gain access to our financial systems”.

UK PM Boris Johnson said Britain had taken “decisive action”, tweeting: “We will keep working together to ensure Putin pays the price for his aggression.”

The measures were agreed by the US, UK, Europe and Canada.

It is the latest round of sanctions to hit Russia since it launched an invasion of Ukraine this week.

Removing banks from Swift is deemed to be a severe curb because almost all banks use the system.

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MasterCard and Visa have decided to block credit card services to some Russian bank customers as a result of US sanctions.

Four banks are so far affected, all of which have links to Russians blacklisted by the US.

Visa and MasterCard are forbidden from having any dealings with those targeted by the sanctions.

The banks, which said card services stopped without warning, have described the move as unlawful.

One of the banks affected, Bank Rossiya, is described by the US as Russia’s 15th largest, with assets of $12 billion.

Bank Rossiya has been singled out by Washington as the personal bank for senior Russian officials. US officials said it would be “frozen out” from the dollar.

MasterCard and Visa have decided to block credit card services to some Russian bank customers as a result of US sanctions

MasterCard and Visa have decided to block credit card services to some Russian bank customers as a result of US sanctions (photo AFP)

Russian President Vladimir Putin said Bank Rossiya had nothing to do with events in Crimea and promised to transfer his wages there.

“I personally don’t have an account there, but I certainly will open one on Monday,” he told a meeting of Russia’s Security Council.

Vladimir Putin also instructed the Russian central bank to step in, if needed, but the latter said the sanctions on Bank Rossiya did “not have a serious bearing on the lender’s financial stability”.

Visa and MasterCard also confirmed they had stopped providing services to SMP Bank, which is controlled by US-blacklisted brothers Arkady and Boris Rotenberg.

The bank, which is Russia’s 39th biggest with $5 billion in assets, called the actions “illegitimate” because its owners, rather than the bank itself, were the subject of sanctions.

Bank Rossiya’s affiliate banks, Sobinbank and InvestKapitalBank, were also affected.

But Visa said more than 99% of its business in Russia was untouched by sanctions.

Russian shares fell sharply on Friday as investors weighed the impact of western sanctions over Ukraine.

The MICEX index, which is priced in roubles, fell as much as 3% and the RTS, which is priced in dollars fell 3.6%.

Stocks slumped after President Barack Obama said sanctions might be extended to key parts of the Russian economy if Russia took further action in Ukraine.

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