No safe haven

Russian connections put Swiss firms in crosshairs of US sanctions

russia us sanctions, swiss companies, renova
Viktor Vekselberg. Source: Reuters

Swiss pumpmaker Sulzer announced Thursday it no longer considers itself subject to US sanctions targeting Russian holdings. Sulzer is buying back a 15 percent stake from Renova, a holding of Russian oligarch Viktor Vekselberg, reducing Renova’s control below the 50 percent threshold. The US Treasury’s Office of Foreign Assets Control approved the transaction, effectively clearing Sulzer from US sanctions, the Swiss company said.

Sulzer, whose shares have recovered half of Monday’s 20 percent loss, had its American accounts partially frozen last week because Mr. Vekselberg was the majority owner. This freeze should now be lifted, but obstacles may remain for Sulzer and other Swiss firms doing business with Russian companies.

Before Sulzer announced the purchase, sources had told Handelsblatt that two major Swiss banks, UBS and Credit Suisse, were refusing to trade Sulzer shares out of concern about the sanctions. The global supplier to oil and gas companies, power producers and water utilities had sales of 3 billion Swiss francs ($3.1 billion) last year.

UBS said Wednesday it would not comment on Sulzer. A spokesman only said: “As a global financial services provider, UBS is required to comply with a variety of legal and regulatory requirements.” Credit Suisse issued a similar statement.

In Germany, securities house Clearstream has stopped handling shares of the 14 Russian companies on the US blacklist. The sanctions also raised doubts about the future of the Nord Stream 2 gas pipeline project from Russia to Germany.

“Nobody knows exactly what is allowed and what is not.”

Swiss company official

Russian-controlled Renova also has stakes in other Swiss companies, including technology company Oerlikon and steel producer Schmolz + Bickenbach, but those holdings are less than 50 percent of the shares. “Based on initial analyses, we believe that Oerlikon is not directly affected by the sanctions on the basis of our shareholdings,” Oerlikon said in a statement. Schmolz + Bickenbach also said it does not consider itself “significantly affected” by the sanctions.

In Switzerland, many investors have dumped stocks connected with Russian oligarchs out an abundance of caution. Some of the companies, like Oerlikon, are not directly covered by the US measure, but an analyst at Bank Vontobel said there may still be a risk because US customers could move their business to competitors to avoid compliance issues.

“Nobody knows exactly what is allowed and what is not,” one company official told Handelsblatt.

Another Swiss company scrambling to avoid sanctions is Glencore, the world’s largest miner and commodity dealer. Glencore CEO Ivan Glasenberg resigned Monday from the board of Russian aluminum firm Rusal, owned by Russian oligarch Oleg Deripaska, who is on the US sanctions list. Glencore also cancelled a share transaction with Mr. Deripaska’s London-listed vehicle EN+.

But Glencore is still evaluating its contracts with Rusal, which supplies about 6 percent of the world’s aluminum, almost all of it going to Glencore. It is another sign that the US actions against Russia are having wide-sweeping repercussions in Europe.

Michael Bracher is Handelsblatt’s correspondent in Zurich. Gilbert Kreijger, an editor with Handelsblatt Global, contributed to this article. To contact the author: bracher@handelsblatt.com

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