TOKYO: Japanese companies are increasingly concerned about a possible sanctions war over Russia’s military aggression against Ukraine.

Japan and other Group of Seven major industrial nations have announced additional sanctions on Moscow in the wake of Russia’s invasion of Ukraine, which started Thursday.

An official of a Japanese securities company said that the G-7 countries are apparently limiting the targets of their sanctions at the moment in order to avoid major impacts on their own economies.

But a potential sanctions war between the Western countries and Russia could have a considerable economic impact, informed sources said.

Financial sanctions by the United States target Sberbank, Russia’s largest bank, and many other major financial institutions of Russia. Japan announced a freeze on assets at three Russian banks—VEB, PSB and Bank Russia.

Due to the Japanese sanctions, fund transactions between Japanese banks and the three Russian banks are bound to be restricted, possibly affecting fund supplies to Japanese firms operating in Russia. “We may need to switch to banks other than the three Russian institutions subject to the sanctions,” an official at a major Japanese bank said.

VEB, which supplies funds for infrastructure projects in Russia, are also taking part in overseas projects, including one for resources development in the Arctic Ocean, which is joined by a Japanese government-affiliated financial institution and Japanese trading houses.

The inclusion of VEB in the Japanese sanctions list may have an impact on these cooperation frameworks, analysts said.

Japan, the United States and Europe are also cooperating on export restrictions for high-technology products.

Japanese measures include restricting exports of semiconductors and related technologies. “There is a possibility of the Japanese sanctions affecting exports of Russia-bound automobiles and vehicle production in Russia,” said Shota Akimoto, economist at SMBC Nikko Securities Inc.

Japanese companies are concerned that Russia may adopt retaliatory sanctions.

Russia is believed to account for about 30 pct of global supplies of palladium, used as a catalyst for treating automobile exhaust gases.

The automobile industry has already been hit hard by chip shortages and surging materials prices. Prices of palladium and other materials “will go up further,” a senior official of a major Japanese automaker said. “It’s certain that our earnings will be affected negatively.”

Japan’s Financial Services Agency has urged financial institutions in the country to beef up measures against cyberattacks. “We’ll be on high alert,” an official of a major Japanese bank said, in response to the FSA instruction.

JIJI Press