Western banks have found ways to circumvent sanctions against Russia


That banks have put forward such a condition, said one of the bankers familiar with the details of negotiating a deal. According to a source, now in the list of potential participants is as large Russian banks and some foreign, particularly from Switzerland and China.

This information was confirmed by a source in one of Russian banks, a top Manager of a European Bank and financier from one West Bank. “On this condition especially insisted American investment banks who would like to participate. But, as far as I know, none of them disagreed, and Goldman Sachs withdrew its bid,” said Russian investment banker. A source in one of the Western investment banks also said that in this way the participants tried to circumvent the recommendations of the American financial authorities, advised banks to refrain from participation in the government bonds of Russia. As reported by The Wall Street Journal, in Washington believe that it would be contrary to the policy of sanctions against Moscow.

“The point about the guarantee that the money from the bonds will not be taken to sanction companies that banks was discussed with the Finance Ministry officials were willing to enter a contract with the organizers of the loan,” says the banker told. “I know what the condition was put forward, but agreed it on the Russian authorities? I doubt it from the realm of fiction,” objects to the top Manager of a European Bank. The Finance Ministry does not comment on the progress of negotiations with market participants, said assistant Finance Minister Svetlana Nikitina.

The negotiations on the Eurobonds and the timing of their placement are kept secret. It is known that in February, the Finance Ministry sent a proposal 25 foreign and three Russian banks. On February 24, the Ministry has finished the reception of applications, says a source in one of the state banks. Deputy Finance Minister Sergei Storchak said that many banks from the US and the EU on Russia’s proposal did not answer, but stressed that Russia “is from whom to choose in any case”.

For example, the Deputy Chairman of the management Board of the Bank of Isibasi LAN Weisse (Industrial and Commercial Bank of China) stated that his Bank has applied and plans to participate in the organization of accommodation. One of the Russian bankers said that if all foreign banks will refuse participation, three Russian Bank will handle themselves. American banks have already refused to participate, but there is a chance that they would accept European banks, said the head of the Moscow office of one of Western banks. “In this case, the Finance Ministry may try to bring to market bonds denominated in Euro”, — says the banker.

In mid-March the Financial Times citing sources said that Brussels warned European banks from the placement of Russian Eurobonds: the EU believes that the funds raised through placement of securities, can be used “not to destination”. The Agency Bloomberg with reference to high-ranking officials reported on the possible postponement of the placement of Eurobonds, because Russia has been unable to find organizer.

In response, the representatives of the Ministry of Finance said that Russia is not abandoning plans to enter the foreign market, but the deadline of the issue of Eurobonds is not.

Russian Eurobonds

$3 billion can borrow on foreign markets, the Ministry of Finance, according to the budget of 2016

25 foreign banks, Russia has sent in requests for the possible placement of Eurobonds in 2016

$6 billion Russia took in international markets in September 2013 by selling paper maturing in 2019, 2023 and 2043,

A little more than $1 billion totaled at the end of 2015 exposure (the total amount of the credit and investment risk) us Bank Goldman Sachs in Russia, of which $292 million of loans and loan commitments and $791 million — equities and credit derivatives

At the end of 2014 the total exposure of Goldman Sachs in Russia amounted to $863 million

At 29% declined Russia’s foreign debt (state, banks and companies) since the beginning of 2014 ( $729 billion on January 1, 2014 to $515 billion on January 1, 2016)

Source: Ministry Of Finance, Bloomberg

Chief economist for Russia and CIS “Renaissance Capital” Oleg Kuzmin believes that if the Finance Ministry fails to place the Eurobonds, it will be a negative signal for the Russian companies that could attract foreign loans. “For the budget, the deficit of which this year may amount to 4% of GDP, it is not as significant a loss,” he said.

To Finance the deficit then have at the expense of internal loans. Director for analysis of financial markets and macroeconomics UK “Alfa-Capital” Vladimir Bragin says that to take on the domestic market of $3 billion, but not immediately: “If you put that amount gradually and at attractive rates, then in principle the demand for tools that generates revenue in a currency will be. Not only by banks but also by private persons.”

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).

As previously reported, the Ministry of Finance laid the budget of 2016 the opportunity to borrow on foreign markets to $3 billion.