Major European banks BNP Paribas, Credit Suisse Group AG, Deutsche Bank AG, HSBC and UBS Group AG agreed to withdraw from the placement of Russian Eurobonds, according to The Wall Street Journal, citing informed sources.
As the newspaper notes, European banks took a decision after the recommendations from Brussels, who has previously warned of a credit institution from the placement of Russian sovereign bonds. According to sources the WSJ, the EU does not prohibit banks to engage in these transactions, as entered against Russia sanctions are not directly impose restrictions on the placement of the government bonds of European banks. However, Brussels is concerned that the proceeds from the transaction may ultimately prove to be at the disposal of the companies included in the sanctions lists.
In the recommendations of European officials stated that “any Bank should be careful to exercise due diligence” to protect themselves from such scenarios, says WSJ.
In addition, according to the publication, European banks do not want to anger the U.S., which in recent years impose billions in fines on European credit institution for violation of the sanctions policy, including BNP Paribas SA and HSBC Holdings PLC.
Here the Moscow banker familiar with the details of the transaction, told the WSJ on condition of anonymity that the talks with Russia asking banks to place the bonds were not denominated in dollars. Otherwise, the calculations will take place across the U.S., and this could be a problem for the banks involved in the deal, said the source.
The WSJ source in the Russian government, in turn, reported that at the end of this or early next week finally will be known which banks will participate in the placement of Russian Eurobonds.
Earlier that Brussels has approached the European banks with the caution about the deployment of Russian Eurobonds, wrote the Financial Times. According to the publication, the representatives of Brussels in private conversations with banking executives urged to remember about the risk that bonds can be used to bypass the sanctions, and to take precautions.
If this warning message will convince European banks, Russia may be forced to abandon the first few years of attempts to market borrowing, noted FT.
Earlier The Wall Street Journal wrote that the us government has warned the big banks the U.S. to participate in placing of the Russian Eurobonds. In Washington felt that this may conflict with the sanctions policy against Moscow. Then the publication reported that not all banks were already defined with the further actions. Later sources reported that Goldman Sachs has made an application on participation in the placement of Russian sovereign bonds, however, so that it can be revoked at any time by referring to the position of senior managers of the Bank. According to WSJ, J. P. Morgan Chase has considered the possibility of application, but in the end the Bank decided not to do it, and Bank of America Corp., Citigroup Inc., Morgan Stanley and Wells Fargo & Co. initially said its refusal.
The last time Russia took on the international markets in September 2013, when he sold the paper for $6 billion maturing in 2019, 2023 and 2043 respectively. Since then she has not appeared in international capital markets because of Western sanctions imposed after the annexation of Crimea, which effectively closed the country to foreign debt markets (though Western sanctions do not apply to hoteistitania).
In early February it became known that Russia has sent 25 requests to foreign banks on the organization of a possible placement of Eurobonds in 2016. Requests, in particular, was focused Barclays, BNP Paribas, Bank of America Merrill Lynch, Bank of China, Wells Fargo, Goldman Sachs, J. P. Morgan, Deutsche Bank, Industrial and Commercial Bank of China, Crédit Agricole, Credit Suisse, Landesbank Baden-Wuerttemberg, Morgan Stanley, Mizuho Financial, Nomura, Citigroup, Societe Generale, Scotiabank, TD Securities, China Construction Bank, Agricultural Bank of China, HSBC, RBC Capital Markets, UBS, UniCredit, as well as three Russian banks: “VTB Capital”, Gazprombank, Sberbank CIB.