Trade clause – Kommersant newspaper No. 234 (7435) dated 12/16/2022
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Vladimir Potanin and his family, as well as the Interros holding and Rosbank, were blacklisted by the United States. American persons are now prohibited from any interaction with them. However, the two major assets of the businessman have not yet been affected by the sanctions. In the Tinkoff group, Mr. Potanin owns only 35%, and the US Treasury made a special reservation for Norilsk Nickel MMC. The inclusion of MMC in the SDN list could sharply aggravate the situation on the world market of non-ferrous metals. But lawyers admit that even taking into account the formal withdrawal of Norilsk Nickel from sanctions, there may be “increased attention” to him, and personally, pressure will increase on Mr. Potanin in order to leave the post of head of the MMC.
Norilsk Nickel co-owner and president Vladimir Potanin officially included to the US SDN list. Also on the list were the Interros holding (which owns 36.14% of Norilsk Nickel), members of the businessman’s family and his Rosbank. Norilsk Nickel itself escaped the sanctions: OFAC specifically stipulates that the MMC is not subject to sanctions, “because, as of December 15, the sanctioned persons do not own 50% of the company’s shares.” The situation is the same with another major asset of Mr. Potanin, Tinkoff Bank: in the TCS Group, the businessman controls only 35%.
Vladimir Potanin remained one of the few major Russian businessmen who, until recently, had not been affected by the most severe Western sanctions.
In June he has entered blacklisted in the UK. Blocking sanctions against Mr. Potanin’s largest asset would have dire consequences: MMC’s share of the world market for high-grade nickel is 17%, palladium 38%, platinum 10%, rhodium 7%, copper and cobalt 2% each. Investors’ fears about the limitation of deliveries from Russia have already led to panic in the markets: in March, the LME had to stop trading in nickel after the price of the metal exceeded $100,000 per ton.
“In the current version of the US sanctions, most likely, they will not affect the dynamics of nickel prices,” Boris Krasnozhenov from Alfa Bank believes. next year may remain in the range of $25-30 thousand per ton”. AB EMPP partner Mergen Doraev believes that by emphasizing the exclusion of MMC, “the US authorities are trying to avoid excessive influence on the nickel market, similar to the effect that sanctions against Rusal had in 2018.”
Ekaterina Makeeva, a partner at the A-Pro law firm, adds that to block, ownership of 50% or more is needed, that is, formally Norilsk Nickel was not subject to sanctions. However, the lawyer admits that “as a “repercussion” after the sanctions against one of the largest shareholders, cross-border deliveries for the holding companies will now be paid more attention to by customs brokers and foreign manufacturers.”
Rusal, which owns a 26.4% stake in Norilsk Nickel, said they were “interested in the stability of the company.” “We believe that the absolute priority of the MMC management should be to reduce sanctions risks,” emphasized Elena Bezdenezhnykh, Vice President of Rusal and a member of the Board of Directors of Norilsk Nickel. maintaining sustainability.”
Meanwhile, a change in the situation around Vladimir Potanin may affect the balance in the long-smoldering conflict shareholders of MMC.
This year, their agreement expires, where the dividend formula is fixed with the payment of 60% of MMC’s EBITDA. Vladimir Potanin’s position is to count dividends not from EBITDA, but from free cash flow, which would lead to a reduction in payments, which Rusal opposes.
“If the worst-case scenarios come true, the impact of sanctions would be short-term, since Norilsk Nickel, given its role in the metals markets and its scale, would need time to adapt to new realities. For this period, the discussion of the dividend policy would have been postponed,” Kirill Chuiko from BCS believes.
But sanctions against Vladimir Potanin could intensify demands for him to leave the company’s presidency. At the end of October, Rusal filed a lawsuit against Vladimir Potanin in a London court, accusing him of causing damage to shareholders as a result of his leadership. Also, the aluminum company demanded his resignation, believing that the head of the company should be an independent leader. Delcredere lawyer Artem Kasumyan believes that risks and negative effects for Norilsk Nickel can be reduced by “changing the corporate structure: minimizing the role of sanctioned persons in it.”
The second key asset of Mr. Potanin, Rosbank, bought back from the French Societe Generale SA after the outbreak of hostilities in Ukraine, was included in the SDN list as a separate line (along with a number of its subsidiaries, as well as 17 VTB affiliates). OFAC in a press release notes that the Central Bank classifies Rosbank as “systemically important credit institutions for the government of the Russian Federation.” A similar argument was put forward by the Financial Sanctions Enforcement Authority (OFSI) of Great Britain in the summer, imposing sanctions against Vladimir Potanin precisely because of Rosbank. At the same time, the United States issued a license until March 15 to complete all transactions with Rosbank and organizations in which it has control.
Rosbank is one of the largest private Russian banks. According to Interfax, at the end of 2021, he ranked 11th in terms of assets (1.58 trillion rubles) and 11th in terms of capital (0.21 trillion rubles). Interros bought back almost 100% of the bank’s shares in the spring, but in September 7.5% of the shares were sold to the Rusfinance investment company (owned by the bank, the papers are intended for an option program for employees), and in October 47.5% went to the Vladimir Potanin charitable foundation . This is probably why the direct inclusion of the bank in the SDN list was required.
Rosbank itself said that it “continues to work in the standard mode, to carry out all transactions in rubles both remotely and in a wide network of offices.”
Mr. Potanin also owns a number of other assets. LLC Rosa Khutor Ski Resort Development Company, according to Kartoteka.ru, through Sport Invest LLC, is controlled by offshore companies Whiteleave Holdings Limited and Britolina Consultants Limited. They are connected with the structures of Interros. The representative of Rosa Khutor did not answer Kommersant’s questions.
But Stanislav Ivashkevich, founder of Ivashkevich Hospitality, doubts the restrictions will significantly affect the company. “In fact, we don’t have a single large hotel owner left who would not be on the sanctions lists, and they all continue to work,” he says. The expert notes that all hotel operators who considered the Russian market toxic for their business have already left it.
Interros owns 40% of the software developer Reksoft (among its clients are VTB, Gazprom Neft, S7, Pulkovo, Russian Post) and the Voskhod investment fund (created in September 2021, its budget, according to According to Interros, for the next five years it should amount to 10 billion rubles), which is focused on supporting high-tech start-ups.
Voskhod and Reksoft did not answer Kommersant’s questions about the possible consequences of the sanctions.
US expands sanctions against VTB Group
The latest update of the OFAC SDN list included 17 companies that, according to the regulator, are subsidiaries of VTB. Of these, 15 are located in the Russian Federation (including SG-Development, VTB Development, Citibike, Kordex, Debt Center, etc.), one each in the UK and Cyprus.
VTB said that the US sanctions imposed on affiliated companies are “another proof of the desire to put pressure on businesses, partners and counterparties in order to obtain their own benefit” and is a politicized decision. At the same time, VTB itself has been living under sanctions since February and “knows how to adapt.”
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