HSBC faces pressure over investments in Russian oil after Ukraine invasion

UK multinational bank HSBC will face mounting pressure to cut ties with some of Russia's largest oil producers following the invasion of Ukraine, analysts and campaigners have told The Independent.

Western nations have imposed unprecedented levels of sanctions against Russia bringing trade almost to a halt, while major firms have severed ties with Russian business interests and brands have suspended sales amid boycotts of Russian interests.

Oil companies including BP, Shell and Exxon Mobil have all pulled out of Russian fossil fuel holdings following the invasion, but not all shareholders have followed suit.

HSBC owns equity stakes in five of the biggest Russian oil and gas companies – Gazprom, Rosneft, Tatneft, Lukoil and Novatek.

Both Gazprom and Rosneft's biggest shareholders are the Russian state.

According to data seen by The Independent, HSBC is the 19th biggest shareholder in Gazprom, holding over 16 million shares, and it also had just under a million shares in Rosneft.

Furthermore, HSBC was also involved in two large financings of Gazprom in 2019 and 2021, in which the bank put up over $500m each time in the form of a “revolving credit facility” – a flexible form of credit – in which the bank was named as a “lead manager” on both deals.

“These banks and other investors are going to come under increasing pressure to pull out of Russia,” said John Lough, an associate fellow in the Russia and Eurasia programme at Chatham House and an expert on energy markets in Eastern Europe.

Speaking to The Independent, he said: “Russia has become a pariah state. We've never seen this level of sanctions introduced against any country. We see that there is a war going on at present with fantastic levels of destruction and human suffering, and it's become entirely inappropriate to continue business as usual, so the most radical measures are being taken now to cripple the Russian economy.

“HSBC can't sit idly by and wait until this is all over and say ‘it's going to be fine’. That's not an option,” he said.

HSBC made “no comment” when asked by The Independent if it was cutting ties with these oil companies.

Adam McGibbon from campaign group Market Forces, told The Independent: “HSBC should not own stakes in companies that on a good day fuel the climate crisis, and on a bad day provide the capital for Russia’s government and military forces.

“HSBC’s customers and investors need to ask whether their money has been pulled out of Russian companies – especially oil and gas companies and those facing sanctions. But we also deserve answers as to why on earth their money was invested in these companies in the first place?”

He said that even prior to the invasion of Ukraine HSBC “should not be invested in companies whose business plans are aligned with the failure of the Paris Agreement and are fuelling a climate crisis that will lead to more resource scarcity, displacement and conflict in future.”

Another company with shares in at least four Russian oil firms, asset management firm Schroders, has already stated it now has “sell orders” on Russian stocks due to the country becoming “utterly uninvestable”.

While the shares will be owned on behalf of HSBC's clients, HSBC retains the decision over whether to facilitate this service or not – for example they have strict rules on investments in arms such as cluster munitions.

Mr McGibbon suggested that by continuing to provide such a service, people will recognise that HSBC – a bank headquartered in Britain – is “providing legitimacy” to such investments.

The possibility of further sanctions on Russian energy is also having an impact on the market.

Simone Tagliapietra, an expert in international energy relations and research fellow at Belgian economics think tank Bruegel, told The Independent: “The traders, the financial intermediaries are afraid of potential, new upcoming sanctions, and for that reason they are trying to avoid touching Russian oil, and also now, Russian gas.

“This has sent the prices of both commodities to the moon because the market is already starting to factor in a potential embargo on Russian energy.”

He added: “The pressure [to divest from Russian energy interests] is coming from the fact that what we are seeing every day in Ukraine is shocking, and the more the barbarity continues, the more western governments will be pressured to do something more against Russia.

“This is what is pushing companies and where the pressure is coming from.”

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