Norway’s sovereign wealth fund manager (SWF) has asked for official permission to sell off any of the now-frozen Russian assets it owns, revealing the investment total has bounced back considerably since almost vanishing after Russia’s invasion of Ukraine.
Norges Bank Investment Management (NBIM), which manages the Government Pension Fund Global (GPFG), announced this morning it sent a letter to the Norwegian Finance Ministry back in August asking for the general freeze on the SWF’s Russian assets to be lifted.
NBIM said in the letter: “It is still not possible to draw up a general plan for the divestment of our Russian portfolio. An approach where Norges Bank is able to undertake isolated transactions if and when divestment opportunities arise is currently the only way for Norges Bank to sell off parts of the Russian portfolio.
“Norges Bank therefore requests the Ministry’s authorisation to make such divestments where this is possible under applicable sanctions rules.
“Such an approach to seizing divestment opportunities would mean an end to the general freeze on the fund’s investments in Russia,” it said in the letter signed by NBIM chair and central bank governor Ida Wolden Bache, and the chief executive officer of NBIM, Nicolai Tangen.
Immediately after Russia’s invasion of Ukraine in 2022, the Norwegian government instructed NBIM to come up with an action plan for divesting all its Russian assets, but even in November 2023, it was unable to do that, because of ever-widening sanctions against Russia and Russia’s countermeasures.
Within days of the Russian invasion, the GPFG’s Russian equity and bond investments dwindled to just a tenth of their NOK27bn (€2.3bn) value at the start of 2022.
But the letter published today reveals that value has increased substantially since the low point, mainly because of dividends.
NBIM said the value of the GPFG’s Russian equity portfolio was estimated to be NOK1.5bn at the end of June this year, but in addition, the fund had around NOK3.2bn in rubles in its custodian Citibank’s account with the Russian National Settlement Depository (NSD), which it said consisted of dividends received since February 2022.
Exclusions
Separately, NBIM announced yesterday it has decided to exclude two companies and end observation of one company from the SWF.
It said Bezeq The Israeli Telecommunication Corp was being banned “due to an unacceptable risk that the company contributes to serious violations of the rights of individuals in situations of war and conflict, ref. the conduct-based criterion § 4 b in the Guidelines for Observation and Exclusion from the Government Pension Fund Global”.
NBIM said the decision was based on a recommendation from the Council on Ethics of 30 August 2024.
The Israel telecoms company blacklisting is the first such divestment since the fund’s ethics council toughened its interpretation of ethics standards for businesses aiding Israel’s operations in the occupied Palestinian territories at the end of August, according to Reuters.
NBIM is also excluding London-listed company Evraz, which produces steel in Russia, “due to an unacceptable risk that the company contributes to serious violations of fundamental ethical norms”.
It said Evraz was one of the companies due to be sold following Russia’s invasion of Ukraine, but that due to sanctions and operational issues, the fund had been unable to sell it.
IPE has contacted both Bezeq and Evraz for comment.
NBIM said it was ending its observation of Hyundai Engineering & Construction, a status that has existed since July 2021 due to a risk the firm had contributed to or been responsible for gross corruption.
“According to the Council on Ethics, the company has since implemented an anti-corruption system largely aligned with internationally recognized recommendations for such systems,” NBIM said.
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