Russian sanction dominoes setup

International lenders to VTB Group are waiting for the outcome of a European Union sanctions meeting before deciding to approve a $1.5 billion loan to the Russian bank, according to three people with knowledge of the matter.

Russia’s second-biggest bank sought to sign the deal last week from a group led by Barclays Plc, said two other people, who asked not to be identified because they’re not authorized to speak about it. ING Groep NV, which lost an executive in the downing of Malaysian Air Flight MH17, was among the initial group of lenders.

EU representatives are discussing broadening sanctions on Russia including banning investments in debt and equity sold by Russia’s state-owned banks as they seek to end support for separatists in Ukraine’s east. The Russian government holds 60.9 percent of VTB Group, the bank’s website shows. The bank doesn’t appear on any current sanctions list.

Other lenders considering signing the deal include UniCredit SpA of Italy, Citigroup Inc. and Bank of America Corp.

Barclays spokesman Jon Laycock declined to comment on the VTB loan, as did Simon Boughey, a spokesman at Citigroup, Alexandra Parry, a spokeswoman at Bank of America and Andrea Morawski at UniCredit.

VTB spokeswoman Tatyana Novikova also declined to comment.

Raymond Vermeulen, a spokesman at ING, said the bank has a history of supporting clients in both Ukraine and Russia and intended to remain “long-term players in both,” while looking at its exposures and possibly reducing some, he said.

Intensified monitoring

“We have intensified our monitoring and tightened acceptance criteria. We continue to review all scenario’s and make decisions on a case by case basis,” he said by e-mail, declining to comment on individual transactions.

The U.S. already imposed the most aggressive sanctions to date on Russian business targeting companies including OAO Gazprombank and Rosneft while EU leaders agreed to blacklist companies and halt lending to public-sector projects in Russia

Lending to Russian companies has fallen since the crisis began as international banks weigh the political and financial risks of maintaining relationships with clients in the country. HSBC Holdings Plc and Lloyds Banking Group Plc pulled out of a loan for Britain’s BP Plc and Moscow-based OAO Rosneft because of the continued uprising in Ukraine.

The EU proposals include a ban on European purchases of securities with a maturity of more than 90 days sold by Russian banks with more than 50 percent state ownership, according to the proposals first seen by member states on July 24.

Comments
comments powered by Disqus