VTB’s Lenders Said to Await EU Sanctions Clarity on Russia

Jul 29, 2014 4:18 pm ET

(Updates with U.S. sanctions in fourth paragraph.)

July 29 (Bloomberg) -- International lenders to VTB Group are waiting for details on European Union sanctions on Russia before deciding to approve a $1.5 billion loan to the bank, according to three people with knowledge of the matter.

The second-biggest Russian bank sought to sign the deal last week with 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 governments agreed today to bar Russian state-owned banks from selling shares or bonds in Europe and restricted the export of equipment to modernize the oil industry. 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. The U.S. announced today sanctions targeting VTB Group, joining with the EU in escalating the penalties for Russia over its actions in Ukraine.

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.