U.S., allies to ban investments in Russia, sanction banks on Wednesday

By Andrea Shalal and Nandita Bose

WASHINGTON (Reuters) -The United States and its allies will on Wednesday impose new sanctions on Russian banks and officials and ban new investment in Russia, the White House said, after officials in Washington and Kyiv accused Moscow of committing war crimes in the Ukrainian town of Bucha.

The sanctions will increase curbs on financial institutions and state-owned enterprises in Russia and target Russian government officials and their families, White House press secretary Jen Psaki told reporters on Tuesday.

“Tomorrow, what we’re going to announce… in coordination with the G7 and EU, (is) an additional sweeping package of sanctions measures that will impose costs on Russia and send it further down the road of economic, financial and technological isolation,” Psaki said, noting that the G7 and EU comprised around 50% of the global economy.

The measures will “degrade key instruments of Russian state power, impose acute and immediate economic harm on Russia, and hold accountable the Russian kleptocracy that funds and supports (Russian President Vladimir) Putin’s war,” she said.

She declined to comment on reports that the sanctions would target the daughters of Putin.

Grim images emerging from Bucha include a mass grave and bodies of people shot at close range, prompting calls for tougher action against Moscow and an international investigation.

U.S. Secretary of State Antony Blinken said on Tuesday, without offering evidence, that the killings were no random act of a rogue unit but part of a deliberate Russian campaign to commit atrocities.

Russia, which says it launched a “special military operation” in Ukraine on Feb. 24 to demilitarize and “denazify” its neighbor, denies targeting civilians and said the deaths were a “monstrous forgery” staged by the West to discredit it.

A senior French official said earlier on Tuesday that the European Union would also likely impose new sanctions on Wednesday. The Wall Street Journal reported Sberbank may be among the banks targeted.

Two European diplomats said the final package of sanctions was still being finalized and would be announced in a coordinated fashion on Wednesday.

Psaki said Washington would continue to pile pressure on other countries like India to abide by the sanctions and play a “constructive” role in holding Russia accountable.

Ukraine, a parliamentary democracy, says it was invaded by Russia without provocation. Because of the war and Western sanctions, experts forecast a contraction of the Russian economy of as much as 15%.

(Reporting by Andrea Shalal; writing by Susan Heavey; editing by Heather Timmons, Howard Goller and Rosalba O’Brien)