New Russia Sanctions Create Snag For Italian Bank

Due to the new U.S. sanctions on Russia, Italian bank Intesa Sanpaolo has hit a snag in its plans to syndicate a US$6.13 billion (5.2 billion euro) loan it had extended to Glencore and the Qatar Investment Authority to help them fund the acquisition of a 19.5-percent interest in Russian oil giant Rosneft, Reuters reported on Friday, quoting four banking sources.

In May, Intesa Sanpaolo—Italy’s largest bank in terms of market capitalization—started the process to syndicate the loan, looking at ways to spread the risk, and launched a loan syndication process with a “limited group of banks”, a banker told Reuters back then.  

The deal for the privatization of 19.5 percent of Rosneft, announced in December and completed in January, valued the stake at around US$11.3 billion. Upon announcing the deal, Rosneft said that the acquisition would be financed with funds from the buyers as well as debt financing, the bulk of which would be provided by Intesa.

According to Reuters, Intesa had invited some 15 banks to participate in the syndication when it opened the process in May, but some banks refused to study a possible participation because Rosneft, as well as its chief executive Igor Sechin, was on the list of those sanctioned in 2014 by the United States over Russia’s annexation of Crimea.

Now because of the new U.S. sanctions on Russia, Western banks, including financial institutions from the U.S. and France, have put on hold their participation in the syndication, until they have a chance to fully understand the possible implications of the additional sanctions.

Related: Billions In Oil Deals Shield Iran From U.S. Sanctions 

Intesa’s loan syndication efforts also coincided with the Qatar-Saudi spat in the Middle East, and this development also somewhat slowed the deal, one of Reuters sources said, but added that the real problem was the new sanctions on Russia.

“The syndication is stuck because of new U.S. sanctions on Russia. The new sanctions are so wide-reaching that they will surely impact all similar deals involving Russian state firms,” a London-based source with a big Western bank invited by Intesa to participate in the syndication, told Reuters.

By Tsvetana Paraskova for Oilprice.com

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