Norway’s Government Pension Fund Global (GPFG) – the world’s third largest sovereign wealth fund – could divest its Russian holdings if the Norwegian government decides to support investment restrictions against the country in the wake of the air disaster in Ukraine. 

The former oil fund currently has around NOK5.5trn (€657bn) in assets. 

Runar Malkenes, spokesman for the Norwegian Ministry of Finance, said: “If the oil fund’s investments become affected by economic sanctions against Russia that Norway supports, NBIM (Norges Bank Investment Management), as the operational manager of the fund, will need to make the necessary adjustments to accommodate the new situation.” 

He stressed the fund was a financial investor, and its investments were not a foreign policy tool. 

“The responsibility for Norway’s participation in international economic sanctions rests with the Ministry of Foreign Affairs,” he said. 

Norway is not a member of the EU, but is in the European Economic Area (EEA) by dint of its membership of the European Free Trade Association (EFTA).  

EFTA members adopt almost all EU legislation related to the single market. 

Frode Andersen, spokesman for the Ministry of Foreign Affairs, said the ministry would “carefully consider new restrictive measures from the EU and consult the Parliament as necessary”.

He added: “It’s important the restrictive measures we support have the broadest possible base.”

The European Commission and the European External Action Service (EEAS) are due today to present proposals on action to be taken following the downing of flight MH17 over Ukraine, following a request by the European Council. 

The council had already agreed on 16 July to target Russia with a new set of six restrictive measures, saying they regretted Russia and the separatists in Ukraine had not taken the steps set out in a previous council conclusion. 

The proposals will concern action including access to capital markets, defence, dual-use goods and sensitive technologies, including in the energy sector, according to the EU. 

With around NOK47.7bn invested in Russia through both equity and bond markets, according to figures for the end of 2013 – NOK22.1bn in equities and NOK25.5bn in fixed income – the GPFG is a big investor in the country, even though in percentage terms its exposure is less significant.

Line Aaltvedt, spokeswoman for NBIM, said: “We are observing the situation in Russia.” 

She added that the investment manager did not give comments on divestment. 

According to the pension fund’s 2013 report, equity investments in Russia amounted to 0.7% of overall equity assets of NOK2.3trn at the end of 2013. 

Exposure to the Russian rouble in the fixed income portfolio stood at 1.3% of net fixed income assets of NOK1.9trn. 

It its first-quarter report, the fund said it had made a loss of 9.7% on its NOK24.3bn of Russian government bond holdings in the three-month period. 

Geopolitical uncertainty had led to the weakening of the rouble, and the central bank of Russia had raised its rates in an effort to stem the decline, it said in the report.

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