Russian Companies Withdraw Billions From West, Say Moscow Bankers

[Purveyor]

By Patrick Jenkins and Daniel Schäfer in London and Courtney Weaver and Jack Farchy in Moscow

Russian companies are pulling billions out of western banks, fearful that any US sanctions over the Crimean crisis could lead to an asset freeze, according to bankers in Moscow.

Sberbank and VTB, Russia’s giant partly state-owned banks, as well as industrial companies, such as energy group Lukoil, are among those repatriating cash from western lenders with operations in the US. VTB has also cancelled a planned US investor summit next month, according to bankers.

The flight comes as last-ditch diplomatic talks between Russia’s foreign minister and the US secretary of state to resolve the tensions in Ukraine ended without an agreement.

Markets were nervous before Sunday’s Crimea referendum on secession from Ukraine. Traders and businesspeople fear this could spark western sanctions against Russia as early as Monday.

Yields on Russia’s 10-year government bonds rose close to 9.7 per cent on Friday, compared with less than 8 per cent in January. The rouble hit 36.7 to the dollar, near to its weakest rate on record.

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http://www.ft.com/intl/cms/s/0/ffea2660-ab9e-11e3-aad9-00144feab7de.html#axzz2vz17D0tR

[FarCenter]

1. Was that Russia transferring dollar holdings offshore?

The Fed's custody holdings report is usually a sleeper, but this week there was a whopping withdrawal by some central bank. And while there's no evidence, speculation is that it was Russia.

Foreign central banks' holdings of U.S. marketable securities fell in the week that ended Wednesday by a record $106.1 billion, and that was mostly Treasurys. The holdings of U.S. securities held by the Fed for other central banks fell to $3.21 billion, the lowest level since December 2012.

While traders say they suspect it was Russia, they don't know for sure, and it has not shown up on Russia's balance sheet.

However, Marc Chandler, chief Treasury strategist at Brown Brothers Harriman, said everything points to Russia, starting with the timing of Sunday's Crimean referendum and the potential for Western sanctions. He said rather than selling the Treasurys, Russia simply transferred them out of the U.S.

http://www.cnbc.com/id/101495837