EU sanctions Russia's settlement depository

The European Union has expanded sanctions against Russia and added the National Settlement Depository

which Moscow planned to use to service the country's Eurobonds, to the list of sanctioned entities, an EU document showed on Friday.

Russia said this week it was replacing Citibank, which has stopped servicing the country's Eurobonds,

with its own National Settlement Depository (NSD), as it risks its first major external debt default in more than a century.

After a key U.S. waiver allowing Russia to service its Eurobonds in original currency of issuance expired last week

Moscow proposed paying Eurobond holders by applying the mechanism it uses to process payments for its gas in roubles.

Under the plan, which was to be presented this month, Russia wanted foreign bondholders to open rouble and hard currency accounts

at a Russian bank which would then convert roubles into forex and pay bondholders back via the NSD.