US steps up sanctions on Russia over Ukraine crisis

The United States hit Russia Friday with another round of economic sanctions, levying penalties on its largest bank and expanding financing restrictions on major energy and defense companies.

The sanctions were imposed in coordination with the European Union, which unveiled its own package of penalties hours earlier. Officials said the parallel penalties are aimed at punishing Russia for deepening its provocations in Ukraine, including sending forces and weaponry across the border.

The penalties were levied despite a fragile cease-fire between Ukraine and pro-Russian separatists. However, officials said the sanctions could be rolled back if the separatists and Russia implement the agreement in good faith.

"What we’re looking for with regard to Russian action is the complete removal of all military personnel, military equipment, support for military and mercenaries on the territory of Ukraine, release of all hostages," a senior U.S. official told reporters in a conference call explaining the sanctions.

The official, who spoke on condition of anonymity, said the U.S. wanted to see the creation of a buffer zone on both sides of the border, which the official said was particularly important to stop shelling of Ukraine by Russia.

A defiant Russian President Vladimir Putin called the new economic penalties "strange," given his backing of peace efforts in eastern Ukraine, and said he was considering fresh retaliatory measures.

A prime target of the new sanctions is Sberbank of Russia, the country's largest financial institution. The bank accounts for approximately a quarter of Russian banking assets and a third of its banking capital, according to the Obama administration.

Sberbank, along with five other previously sanctioned Russian banks, will now face restrictions if it seeks debt financing of longer than 30 days. The European Union issued similar restrictions Friday, effectively locking the Russian banks out of any long-term debt financing from the West.

The U.S. was also prohibiting American entities from exporting goods, services or technology to help Russian energy companies with the exploration or production of potentially lucrative oil projects. The sanctioned Russian companies include Gazprom, the world's largest extractor of natural gas, and Rosneft, an oil company owned by the Russian government.

The penalties could impact major U.S. companies that have partnered with key players in Russia's energy industry.

Russia is one of the world's top oil producers and is the main energy supplier to Europe. Exxon signed a $3.2 billion agreement in 2011 with Rosneft to develop the Arctic.

Also targeted by the U.S. sanctions are five Russian defense companies that produce weapons, ammunition and anti-aircraft systems.

Wire services