As the European Union (EU) decides to extend the economic penalties against Russia, the head of one of Russia's largest banks told CNBC that sanctions were akin to "economic war."

EU foreign ministers agreed Thursday to extend until September travel bans and asset freezes, imposed last year on Russia for incursions into Ukraine territory, which had been due to expire.

"We have quite a strong opinion on sanctions. Sanctions, in other words, are economic war against Russia," Andrey Kostin, chief executive of VTB Bank, told CNBC in Moscow Thursday.

"Economic war will definitely have negative implications for the Russian economy, but more than that it will have very negative implications for political dialogue and security in Europe. And who wants to live in a less secure world?"

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Kostin insisted that sanctions were "the wrong way to treat Russia" and would lead to less stability in Europe.



Russia's economy has been severely impacted not only by sanctions, which have isolated it from international business and trade, but from the falling oil price which has plummeted around 60 percent since June 2014, hurting its exports and revenues. As a consequence, Russia is expected to enter recession in 2015.

The country's Finance Minister Anton Siluanov told CNBC Thursday that Russia had always been against "any forms of limitations in capital flows and trade."

"Of course, any sanctions are harmful because they cause the slowdown in the global economy. And the sanctions that have already been imposed against Russia did have negative effect on us," he said.

Siluanov was conservative about their impact, however, saying that Russian companies had adjusted to sanctions and "life still goes on here."