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Russia's National Settlement Depository (NSD) was sanctioned
last Friday, scuppering Moscow's plan to use it to service the
country's Eurobonds, while the U.S. Treasury on Tuesday has
banned U.S. money managers from buying any Russian stocks in
secondary markets.
That has complicated already challenging conditions for Russian
companies, including dominant lender Sberbank and No. 2 bank VTB,
both of which have been disconnected from the SWIFT global
payments system over Moscow's actions in Ukraine and have
depositary London-listed receipts.
Depositary receipts are certificates representing shares in a
company foreign to where they are traded, which allow investors
to trade in overseas stocks.
President Vladimir Putin signed a bill in April requiring
Russian companies to delist their depositary receipts to reduce
the influence foreign countries could hold over them, except for
15 companies who were granted permission to remain listed
abroad.
The London Stock Exchange halted trading in the Russian receipts
it lists soon after their prices crashed following the launch of
Moscow's "special military operation" in Ukraine on Feb. 24.
And as sanctions pressure has built, available avenues to
convert them into shares have closed, with the restrictions on
the NSD the latest thorn in holders' sides.
"If depository banks consider interaction with the NSD as
violating EU sanctions, then converting depositary receipts will
be technically impossible for everyone," VTB's My Investments
broker said last week.
The proportion of receipts is usually around 25% of share
capital, said Finam investment consultant Ivan Dubinin, but
estimating accurately is difficult at the moment.
Russian banks have been told by Russian authorities to withhold
classified data and financial reports.
Dubinin said many foreign investors had exited quickly as Russia
began its "special military operation" in Ukraine, but that many
still remained, now with no way out.
Non-resident holders have no way to sell their depositary
receipts, Dubinin said, while there has been no solution
proposed for Russians serviced by foreign brokers.
Sberbank's programme will close on June 16, with VTB's following
suit on Sept. 1.
A source close to VTB told Reuters the programme would "peter
out on its own".
Sberbank declined to comment on the impact of NSD sanctions, but
a Sberbank source told Reuters there was a problem in directly
converting receipts stored in European and American clearing
houses.
"A large number of orders to convert such receipts are not
fulfilled by foreign brokers because they are refusing to
conduct transactions with securities of companies on the (United
States') SDN list," the source said.
(Reporting by Reuters; Editing by Alison Williams)
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