The London Stock Exchange has suspended trading in 27 companies with strong links to Russia, including the energy and banking firms Gazprom and Sberbank.
The LSE said it was moving to block trading in the companies that include Severstal, Russia’s largest steel and mining company run by Alexei Mordashov, the country’s richest man.
Also barred are the aluminium company EN+, whose owners include the oligarch Oleg Deripaska, state-controlled Gazprom, the world’s largest gas producer, Rosneft and VK, the parent company of social networking sites including VKontakte, which is bigger than Facebook in Russia.
The list also includes the fertiliser company PhosAgro, which is chaired by former LSE chief Xavier Rolet and has shareholders including the billionaire Andrei Guriev, who owns Witanhurst in London’s Highgate, the largest private house in the capital and second in size only to Buckingham Palace.
Also barred are the energy firm Lukoil, Russia’s largest gold producer Polyus, which is controlled by the family of Suleiman Kerimov, as well as Sberbank, the country’s biggest lender, and Novolipetsk Steel, one of the four largest steel companies in Russia.
The companies trade financial instruments in London including global depositary receipts (GDR) and American depositary receipts (ADR), but not ordinary shares, which are traded in on Russian stock exchanges, where they have their primary listings.
The LSE said it was taking the action “in light of market conditions, and in order to maintain orderly markets”.
However, David Schwimmer, the chief executive of London Stock Exchange Group (LSEG), said that seven Russian companies with London GDRs had not been suspended as this depended on further sanction. Their suspension could also be triggered by an inability to maintain an orderly market.
The comanies whose GDRs continue to trade are the state-owned Federal Grid, Russia’s largest transmission company, the telecoms provider Rostelecom, the residential property developer Etalon, the supermarket chain O’Key, the fertiliser company Acron, the food retail chain Magnit and the investment company Sistema.
“The level of sanctions is unprecedented and very dynamic,” Schwimmer said, speaking on a media call as LSEG announced its financial results for 2021.
Companies that are incorporated in the UK with a primary listing in London – or those incorporated elsewhere that adhere to the UK corporate governance and takeover codes and have more than 50% of their shares traded freely in the UK capital – are also continuing to trade.
The mining company Evraz, in which Roman Abramovich owns a 29% stake, and the precious metals mining group Polymetal meet LSE criteria for being assigned “UK nationality” for trading purposes. On Wednesday, both companies dropped out of the FTSE 100 in its quarterly review after their market values have plummeted.
International pressure is taking an increasing toll on Russian businesses, while the invasion of Ukraine is also disrupting those with operations in the region.
Schwimmer said LSEG had not decided what to do about the 150 staff at its Moscow operation. The company also has nine staff in Ukraine. “Their welfare is our priority and we have taken, and will continue to take, all steps we can to help them stay safe,” he said.
LSEG, which said its own operations in Russia and Ukraine account for less than 1% of total income, added it would “continue to keep this situation under review”.
On Friday, the exchange suspended VTB Capital, a subsidiary of Russia’s second-largest bank VTB, from trading. Earlier this week, the Financial Conduct Authority (FCA) suspended trading in the bank’s global depository receipts on the LSE, where it has a secondary listing. Its main listing is in Moscow.
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On Wednesday, Sberbank announced it was pulling out of the European market, after it said it faced large outflows of cash in the region as well as threats to the safety of its employees and branches.
The announcement came only hours after the European Central Bank ordered the closure of Sberbank Europe, warning the business could fail after a run on deposits because of Vladimir Putin’s invasion of Ukraine.
LSE reported an almost doubling of pre-tax profits from £492m in pandemic-hit 2020 to £987m last year. Total income more than tripled year-on-year from £2bn to £6.7bn. The company’s share price rose more than 7% on the positive results.
Russian firms suspended from the LSE
Magnitogorsk Iron and Steel Works
Fix Price Group
Global Ports Investment
HMS Hydraulic Machines & Systems Group