Chancellor underlines need to economically isolate Vladimir Putin regime after invasion of Ukraine
Rishi Sunak has called on UK firms to stop investing in Russia, as he welcomed the decisions made by some companies, such as the energy firms BP and Shell, along with the investment firms Aviva, M&G and Vanguard, to divest away from Russian assets.
Those companies, among others, have announced their intention to reduce or sell investments in Russia in recent days after its invasion of Ukraine, and the chancellor urged more UK businesses to consider joining them.
Sunak said: “I welcome commitments already made by a number of firms to divest from Russian assets – and I want to make it crystal clear that the government supports further signals of intent.
“I am urging firms to think very carefully about their investments in Russia and how they may aid the Putin regime – and I am also clear that there is no case for new investment in Russia. We must collectively go further in our mission to inflict maximum economic pain – and to stop further bloodshed.”
Sunak and the economic secretary, John Glen, met fund managers and other leading figures in finance last week to discuss UK investment in Russia and welcomed the consensus among firms on the need to economically isolate Putin and his regime.
This has led to big writedowns of Russian assets, with BP’s decision to sell its 20% stake in the Russian state-owned oil company Rosneft costing it up to $25bn (£19.1bn).
"I believe there is no argument for new investment in the Russian Economy."
Chancellor @RishiSunak shares his full support for firms divesting Russian assets, explaining how it will help cripple Putin's War Machine.https://t.co/k3ROfAE4Ga pic.twitter.com/EBMg03j7dl
— HM Treasury (@hmtreasury) March 13, 2022
New York-based BlackRock, the world’s biggest asset management firm, with more than $10tn in assets under management, has recorded $17bn in losses on Russian securities. It manages more than $18bn in Russian assets on behalf of clients – which were frozen on 28 February. The impact of western sanctions on markets, including the two-week shutdown of the Moscow stock exchange, has rendered the vast majority of those assets unsaleable.
The banking group HSBC is under pressure from the public to cut its ties with Russian oil and gas firms, with some customers threatening to switch banks, according to polling for the campaign group 38 Degrees. When Goldman Sachs and JP Morgan Chase became the first major US banks to announce they would wind down their businesses in Russia on Thursday, Deutsche Bank, Germany’s largest bank, still refused to follow suit – only to make a U-turn a day later.
The UK government said it recognised that some firms may find winding down their positions is a long-term process, given market conditions and the ability to sell assets because of the global sanctions placed on the Russian economy.
It said it was “working at pace to sanction more oligarchs with close links to the Kremlin”.
As oil, gas, wheat and other commodity prices have soared globally, threatening to exacerbate the cost of living crisis, the government vowed to “do everything we can to protect consumers and the public”. It said it was already providing support worth £21bn this year and next, to help people with the cost of living, and that it would continue to monitor the economic impact of the conflict.