Sanctions complicating work for Russia’s top businesses

Western sanctions over the Ukraine crisis could force some executives at Russian firms with foreign passports to give up certain duties, complicating life at the top of some of the country’s largest companies.

US and EU sanctions bar some major Russian firms from raising new Western financing of more than 90 days. They also ban US or EU nationals and companies from providing services related to the organisation of long-term funding for the companies, regardless of where it comes from.

Out of the companies on the sanctions lists, Reuters has identified some with senior managers holding a Western passport, including energy firm Novatek, top lender Sberbank, No 2 bank VTB and oil major Rosneft.

Executives with foreign passports at Novatek and VTB have already handed over responsibility for organising new debt or equity issuance to colleagues without EU or US passports.

Banking insiders say beyond the inconvenience of reshuffling roles, the problem has not yet had a major impact. But it adds to a list of Western sanctions that have produced an unintended “boomerang” effect: causing problems for Western firms or individuals, as much as Russian targets.

Head-hunting firms said there has been no exodus of foreign executives from Russian firms as a result of the sanctions, but the problems thrown up could accelerate an existing trend of Russians replacing foreigners in senior posts.

Investment banks are also potentially affected. A banking source, who spoke off the record, said Russian bankers had to step in to handle the financing of sanctioned firms, in place of colleagues with foreign passports.

- Reuters