By Alexis Flynn
A syndicate of European banks, including Dutch lender ING Bank
NV, has inked a financing deal with Russian steelmaker Evraz PLC
worth hundreds of millions of dollars, just weeks after the
European Union tightened sanctions against Moscow for its alleged
backing of Ukrainian separatists blamed for downing the Malaysia
Airlines MH17 passenger plane.
The $425 million five-year loan, arranged by Germany's Deutsche
Bank AG, ING, Stockholm-based Nordea Bank, French bank Société
Générale SA and Austria's Raiffeisen Bank International AG, shows
some European banks are still prepared to do business in Russia,
even as their U.S. and U.K. counterparts dial back their
involvement amid growing Western antagonism toward the Kremlin.
The syndicated loan is the first major lending transaction with
a major Russian company since the EU and U.S. ratcheted up
sanctions against Russia in late July, according to data from
Dealogic.
A Nordea Bank spokesman declined to comment, save to say that
the bank "follows all applicable sanctions, both from the EU and
the U.S."
Deutsche Bank declined to comment. Raiffeisen Bank said its
corporate strategy had not changed and that it wanted to keep its
corporate business in Russia at its current level. "Due to the slow
growth of the Russian economy we are proceeding cautiously and are
following a policy of selective underwriting, with a focus on
relationship customers and market leaders," the bank said. "This
lending policy is not linked to the sanctions. RBI complies with
all applicable sanctions" said bank spokeswoman Ingrid
Krenn-Ditz.
ING and Societe Generale declined to comment.
London-listed Evraz, which announced the financing deal
Wednesday, hasn't been named on any U.S. or EU sanctions lists, and
neither has its controlling shareholder, oligarch billionaire Roman
Abramovich, who also owns London soccer team Chelsea.
Although Mr. Abramovich isn't directly linked to Russian
President Vladimir Putin, prominent Kremlin critic Alexei Navalny
has called on the U.S. to sanction him, describing the oligarch as
"a member of Mr. Putin's inner circle" in an op-ed for the New York
Times in March.
A fresh raft of sanctions aimed squarely at Russia's leading
energy and financial services firms, announced in the wake of the
MH17 tragedy in late July, were supposed to have made investors
wary of doing business in the country.
The sanctions, which prohibit Russian state banks from raising
long-term financing in the EU and stop European firms from
exporting oil industry technology to Russia, were also designed to
harm the powerful elite around Mr. Putin.
The shooting down of the Malaysia Airlines jet, which killed all
298 passengers and crew on board, and the pro-Russian rebels'
obstruction of the crash site appeared to have hardened the
attitudes of many EU nations against Moscow, including Italy,
Germany, the U.K. and the Netherlands, where many of the victims
came from.
"The sanctions are intended to punish specific companies, but
also to indirectly discourage doing business with other companies,"
said Alexander Kliment, director of emerging markets strategy at
Eurasia Group. "Western banks may still be prepared to lend to
non-sanctioned Russian companies, the question is at what
price."
Ben Edwards, Nicole Lundeen in Vienna and Martin van Tartwijk in
Amsterdam contributed to this article