Russia sanctions disrupt Italian bank’s 5b euro loan deal


Italian bank Intesa Sanpaolo has encountered syndication problems of a loan to the wealth fund of Glencore and Qatar to finance their purchase of a stake in the majority petroleum group controlled by the Rosneft Kremlin Because of the new US sanctions against Russia.

Four bank sources told Reuters that Western banks, including the United States and France, have so far suspended their participation in the syndicated loan of 5.2 billion euros ($ 6.13 billion) that Intesa provided last year.

Intesa invited about fifteen banks to join the loan at the opening of the syndication in May. A loan of this size normally takes between four and six weeks to syndicate, although transactions involving emerging markets may take a few weeks longer.

Banking sources said their compliance services should include new sanctions.

They also said that the syndication was complicated by political opposition between Qatar and Saudi Arabia. Banks are taking a more cautious approach to transactions involving Qatar as they are wary of damaging their relations with Saudi Arabia and the other three Gulf countries involved in the conflict.

"Syndication is blocked because of new US sanctions against Russia. The new sanctions are so broad that they may have an impact on all similar transactions involving Russian state-owned enterprises," he said. Said a London-based source with a large Western bank invited by Intesa to participate in the syndication.

Intesa, the largest retail bank in Italy, declined to comment. Banking sources did not want themselves or their banks were not allowed to talk about the deal and because the interviews between Intesa and the banks regarding the syndication are confidential.

Last month Washington imposed new sanctions on Russia as part of the strongest action against Moscow since 2014 following Russia 's annexation of the Crimea and the incursion into Russia' East of Ukraine.

The new round of sanctions has been partly a response to the findings of US intelligence agencies that Russia initiated during the US presidential election of 2016. The sanctions have thrown hope 39 A rapprochement between Moscow and Washington.

The syndication was intended to spread the risk for Intesa who has so far lent all the money. The loan helped the amenities of Glencore House and the Qatar Investment Authority to buy 19.5 percent in Rosneft to help the Russian government to plug budget holes.

The Italian Government asserts that the loan complies with the new sanctions.

Intesa, who ranks as a small investment bank player but has good relations in Russia, has invited several French, Dutch and American banks as well as the Chinese Bank of China and ICBC to participate in the " 39; agreement.

One source said that ICBC and the Bank of China had indicated that they would be willing to participate in the agreement, although they are more cautious now, given the political issues Qatar. An ICBC official declined to comment and one at BOC did not immediately respond to a request for comments.

The bankers declared that the syndication must always be complicated.

Rosneft, his boss Igor Sechin and the main Russian state banks are all subjected to sanctions imposed after Russia's annexation of the Crimea of ​​Ukraine in 2014 and some banks have refused To consider the agreement for these reasons from the beginning.

On top of that, Glencore and QIA never revealed all the details of the deal, prompting the bankers to wonder if they could go ahead with syndication without knowing all The beneficiaries of the transaction.

An increase in tensions between Qatar and its Gulf neighbors, including Saudi Arabia, occurred while Intesa began to syndicate the loan.

"The regional dispute did not help – it is difficult," said a loan banker in London.

"Political tensions around Qatar have slowed the deal but a real problem came when the US imposed new sanctions (in Russia) in July," said another bank source based in London.

In 2014, US and European sanctions made it impossible for Russian public companies and many private individuals to create new capital but left loopholes for raising funds.

"With the new sanctions, I expect a lot of problems with loans to projects led by Russian public companies … And maybe to many private," said one Of bank sources.



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