Russian Companies - Recent Conciliatory Actions
Russian companies that have taken recent actions to be more acceptable to US and UK include EN+, Rusal, Renova, and Gazprom. Executive leader Oleg Deripaska has stepped down from his role, and gas giant Gazprom agreed to price rules based on EU pressures that it once refuted.
En+ Group and Rusal
Oleg Deripaska stepped down as the CEO of these two companies, which he helped form. The man is estimated to be worth $5.3 billion. The media reported "by distancing himself, Derispaska may be hoping to protect En+ and Rusal from association". At the time of resignation, Deripaska believed he could be put on sanctions from the US, which ultimately did happen.
Deripaska has been implicated in US based investigations due to ties with the former Trump campaign chairman Paul Manafort. Still, the stepping down may be too late, as the list and connections will make Western banks more cautious with deals moving forward. The move was simply a distraction as the company felt negative impacts even after his resignation.
En+ recently pitched a share sale to many banks, including U.S. financiers, valued at $1 billion. "Deripaska’s role may have been viewed as an impediment to their participation" due to Deripaska's appearance of 200 Russian government and business figures published by the U.S. Treasury and the State Department with the prospect of potential sanctions. The list was pushed for publication through the Countering America’s Adversaries Through Sanctions Act of 2017.
Publication Metal Miner in this article chastises the move stating: "You might be asking: since when does an oligarch voluntarily relinquish control of his empire? Well, possibly – rather like Vladimir Putin stepping aside in 2008 for his friend and colleague Dmitry Medvedev to take over as president – when you do not really relinquish control at all." The move is percieved as quite transparent.
The recent sanctions against Moscow hurt these two companies on top of Derispaska's resignation. "Rusal's Hong Kong-listed share price more than halving to HK$2.30, while shares in En+, which listed on the London Stock Exchange in November, were more than 40 per cent down in afternoon trading." Rusal was aware the sanctions would produce a negative effect stating: "Even the presence of the list makes some Western banks wary of what deals they get into with named parties."
In order to "help to safeguard its market share, Gazprom has quietly agreed price deals with big customers and caved in to EU rules it once flouted". The gas giant has attempted to improve its relationship in the UK. Gazprom relies heavily on the European market in general, which accounted for more than 35% in 2017.
In the time since this statement was released to the public, Alexei Miller, The CEO of Gazprom has been sanctioned by the US. The company has cut down their traders, merging their oil and liquefied natural gas (LNG) positions resulting in job losses. Cuts to their energy trading ventures in London are "fueling speculation that the gas giant is planning to retreat from the West."
"The job cuts have emerged amid reports that Gazprom plans to shut its 1,000-strong London headquarters, near Regent’s Park, amid souring relations between Moscow and Europe". Gazprom caved into the EU's rules and made price deals, which is a distraction, as opposed to being commended. The recent job cuts and loss of trading after the price deals shows the company is not being welcomed or moving forward with UK companies.
We found two examples of moves made by Russian companies and executives to be more appealing to US and UK markets. However, the companies have continued to feel negative impacts due to market sanctions. The actions have been merely a distraction, and unrewarded by Western counterparts.