March 24, 2016, 00:59 | Eurobonds | EU | business | Economy
Large European banks BNP Paribas, Credit Suisse Group AG, Deutsche Bank AG, HSBC and UBS Group AG decided to withdraw from the placement of Russian Eurobonds, writes The Wall Street Journal referring to informed sources.
According to the publication, the European banks have taken this decision after recommendations from Brussels, who has previously warned the credit institutions to deploy Russian government securities. According to WSJ sources, the EU does not prohibit the banks involved in these transactions, since the introduction of sanctions against Russia are not directly impose restrictions on the placement of its government securities by European banks. However, Brussels is concerned that funds raised as a result of the transaction, may ultimately prove to be at the disposal of the companies included in the sanctions lists.
The recommendations of the European officials said that “any bank must be careful and exercise due diligence “to guard against such a scenario, notes WSJ.
in addition, according to the publication, the European banks do not want” to anger the United States “, which the authorities in recent years has imposed billions in fines on European credit institutions for violation of sanctions politicians. In particular, under the penalties have got BNP Paribas SA and HSBC Holdings PLC.
At the same time Moscow banker familiar with the details of the deal, he told the WSJ on condition of anonymity, that the banks in the talks with Russia are asked to place bonds were denominated not in dollars. Otherwise, according to him calculations will take place across the US and this could be a problem for the banks involved in the deal, said the source publication.
WSJ source in the Russian government, in turn, said that the end of this or at the beginning of next week will finally know which banks will take part in the placement of Russian Eurobonds.
Earlier that Brussels appealed to European banks with caution about the placement of Russian Eurobonds, wrote Financial Times. According to the newspaper, representatives of Brussels in a private conversation with the leadership of the banks urged to remember about the risk that the bonds may be used to circumvent the sanctions, and to take precautions.
If this warning convince European banks, Russia may be forced to abandon from the first few years of trying to market borrowing, celebrated FT.
Earlier, The Wall Street Journal wrote that the US authorities have warned major US banks to participate in the placement of Russian Eurobonds. Washington felt that it may be contrary to the policy of sanctions against Moscow. Then edition reported that not all banks have decided on further action. Later, sources told RBC that Goldman Sachs has made an application to participate in the placement of Russian sovereign bonds, but in such a way that it can be revoked at any time by referring to the position of senior bank executives. According to the WSJ, JP Morgan Chase was considering the application, but in the end the bank’s management decided not to do so, and Bank of America Corp., Citigroup Inc., Morgan Stanley and Wells Fargo & amp; Co. originally announced their refusal.
The last time Russia was on the international markets in September 2013, when the paper sold at $ 6 billion, maturing in 2019, 2023 and 2043, respectively. Since then, she did not go to international capital markets due to the sanctions the West imposed after the annexation of Crimea, which virtually shut down the country external debt markets (although Western sanctions do not apply to government borrowings).
At the beginning of February it became it is known that Russia has sent 25 foreign banks to bid for the organization of a possible placement of Eurobonds in 2016.
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