A subsidiary of Russia’s second-largest bank, VTB, has been suspended from trading on the London Stock Exchange after the UK’s imposition of sanctions over Vladimir Putin’s invasion of Ukraine.
The London Stock Exchange Group said on Friday it had suspended VTB Capital’s membership with immediate effect, meaning it can no longer trade on the LSE.
The move comes after Boris Johnson announced what he called the “largest ever” range of sanctions against Russian firms and individuals, freezing the assets of all the main Russian banks, including VTB.
VTB, which is majority owned by the state and has interests in banking assets across eastern Europe, has assets totalling £154bn. Legislation is expected to be tabled next week to ban major Russian companies from raising finance on UK markets and to prevent Moscow from raising sovereign debt in London.
“Sanctions are a reality for us over the last few years and another round of politically motivated anti-Russian sanctions did not come as a surprise,” VTB said in a statement.
Russ Mould, investment director at AJ Bell, explained the significance of the stock exchange’s move. “You have to be a member of the LSE to trade on it, so if VTB Capital’s membership has been suspended it will not be to able to trade in secondary markets in equities, bonds, derivatives, ETFs and any other instruments offered on the LSE platform, or, presumably, raise capital for other firms (or the Russian state) via its primary/advisory arms.
“This does not mean VTB, the parent, cannot lend or have a presence in London or that its stock be suspended – although VTB Capital won’t be able to trade in any stock or debt or derivative instruments related to the parent, I would assume.”
VTB has its primary listing on Russia’s MOEX stock market. It maintains a secondary listing in London, where investors can trade in Global Depositary Receipts each equivalent to 2,000 ordinary VTB shares, which has not been affected by the suspension order on subsidiary VTB Capital.
There are a number of VTB executives, and those with links to the bank, who feature in the government’s list of individuals against whom it has levelled sanctions.
These include VTB’s president-chair, Andrey Kostin, who is also a member of the supreme council of the United Russia political party, as well as high-ranking executives Andrey Puchkov and Yuri Alekseyevich Soloviev.
Denis Bortnikov, the deputy chair of VTB Bank’s management board, is also on the sanctions list. He is a deputy president of VTB Bank and chair of its management board. As well as this, he is the son of Aleksandr Bortnikov, a director of the Federal Security Service (FSB), who has been on the sanctions list since March 2021.
Russian politicians involved with the bank who also feature on the sanctions list include the deputy prime minister and chief of the government staff, Dmitry Grigorenko, who is chair of the supervisory council of VTB Bank. As a former director of the Russian tax service, he set up a new tax system in Crimea after its annexation.
Also featured is Maxim Reshetnikov, the minister of economic development, who is a member of the supervisory council of the VTB Bank.
